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Vodafone loses tax avoidance case in UK

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CIOL Bureau
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LONDON, UK: Global telecom major Vodafone Group PLC has lost a U.K. tax-avoidance case in the Court of Appeal that could cost it as much as £2.2 billion ($3.5 billion), The Wall Street Journal reported today.

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The tax dispute dates back to when Vodafone launched its hostile takeover of Germany's Mannesman in 2000.

As per the tax legislation in UK, the profits of a foreign company in which a UK company owns a holding of more than 50 per cent are attributed to the resident company and subjected to tax in the UK.

Vodafone had approached the court against this citing some precedence where tax exemption was given and the UK High Court ruled last year that the company's interpretation of the law was correct, but gave leave to the Her Majesty Revenue & Customs (HMRC) to appeal. The Court of Appeals, in turn, overturned that ruling on Friday, though the company can still apply to the House of Lords to appeal the decision.

The ruling on Friday means HMRC's inquiry into Vodafone's relevant tax returns can go ahead.

Vodafone had last year lost a tax-related case in India also.

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