India Won’t Appeal Vodafone Tax Ruling to Reassure Investors

Indian authorities won’t appeal a court ruling that sided with Vodafone Group Plc in a tax dispute as Prime Minister Narendra Modi works to reassure foreign investors about governance rules in the country.

By accepting the Bombay High Court’s decision in the mobile-phone operator’s favor, the government hopes to “bring greater clarity and predictability for taxpayers as well as tax authorities,” the Cabinet said in a statement. “This will also set at rest the uncertainty prevailing in the minds of foreign investors and taxpayers.”

The dispute involved the way Newbury, England-based Vodafone reported a transfer of shares between its business in India and another unit. It’s one of a number of long-running rows between international companies and the Indian tax authority.

The decision may also mean relief for Royal Dutch Shell Plc, which is involved in a similar case. The Hague-based oil producer will get the same treatment if the case is identical, India’s Attorney General Mukul Rohatgi said in an interview with Bloomberg TV India today.

Vodafone is also seeking resolution through international arbitration to resolve a separate tax dispute exceeding $2 billion over its 2007 acquisition of Hutchison Whampoa Ltd.’s Indian business.

“We welcome the Indian government’s decision not to appeal the Bombay High Court ruling,” Vodafone said in a statement. “Stability and predictability in tax matters are important for long-term investors such as Vodafone.”

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