INDIA: UK Chancellor adds to calls for tax plan re-think
UK Chancellor George Osborne has warned against the plans by the Indian government
UK Chancellor George Osborne has warned the Indian government against retrospectively taxing overseas investments, arguing it could “damage” the country's business climate.
Proposed changes to Indian tax laws could see firms – including brewer SABMiller - be forced to pay significant sums in backdated capital gains tax, stretching back 50 years. But, after attending the third annual bilateral Economic and Financial Dialogue with his Indian counterpart Pranab Mukherjee yesterday (April 3), Osborne said: "We are concerned that the budget measure will not just impact one company like Vodafone but will damage the overall climate for investment in India.”
It comes after a coalition of trade bodies wrote to the India government this week, voicing their concern about the changes.
Osborne added: "India needs a stable and predictable taxation structure.”
SABMiller is facing an on-going tax case over its US$120m acquisition of Foster's Group's Indian operations in 2006.
However its liability for the case is understood to be around $35m to $40m. A source told just-drinks that this "pales into insignificance" compared to the bill faced by Vodafone for a deal it did in the country in 2007.
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