US, EU envoys protest India’s tax demands

9. US, EU envoys protest India’s tax demands

In a
remarkable demonstration of solidarity in economic diplomacy, ambassadors and
high commissioners of seven rich countries have jointly protested against
features of what they term India’s ‘retrograde’ tax regime.

The
ambassadors of the US, the Netherlands and Spain, high commissioners of UK,
New Zealand and Australia and head of European Commission delegation, have
written to finance minister Pranab Mukherjee seeking an appointment, while
expressing their anxiety over the ‘‘growing unpredictability in India’s tax
policies’’ that are creating ‘unquantifiable risk in investment planning.’

The letter
has been marked to commerce minister Anand Sharma, deputy chairman of Planning
Commission Montek Singh Ahluwalia, cabinet secretary K. M. Chandrasekhar as
well as the secretaries of external affairs, finance, DIPP and commerce &
industry ministries.

The envoys’
concern pertains to application of punitive tax liabilities on deals with
retrospective effect. Their anxiety was triggered by the $ 2-billion tax
controversy involving Vodafone’s $ 12-billion buyout of Hutchison’s stake in
Hutch-Essar, and includes tax troubles in deals like SabMiller’s acquisition
of Foster’s Indian beer business, Aditya Birla Nuvo’s acquisition of shares in
Idea Cellular from AT&T Mauritius, transfer of GECIS Global (Luxembourg)
shares by GE to a consortium of US private equity funds and Vedanta’s
acquisition of Sesa Goa shares held by Mitsui through a UK holding company.

(Source :
The Times of India, 14-10-2009)