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UK says India's plan to retroactively tax business deals may 'damage investment'

New Delhi, Tue, 03 Apr 2012 ANI

New Delhi, Apr 3 (ANI): British finance minister George Osborne has slammed India's decision to introduce retrospective amendments to the tax law, saying it could 'adversely damage' the investment climate in the country.

"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," Osborne said during third annual bilateral Economic and Financial Dialogue with his counterpart Pranab Mukherjee.

The Indian Finance Bill introduced a measure that means deals involving Indian companies dating back to the 1960s could be taxed, irrespective of where the deals were carried out.

Vodafone has been fighting to overturn a 1.4 billion pound tax claim arising from its 2007acquisition of Hutchinson Whampoa's Indian business.

According to The Telegraph, Osborne said India-UK trade had grown by a record 40percent over the past two years and Britain had become the second largest investor in the country.

But he added that the retrospective taxation proposal had the potential to upset these investments, a sentiment that he forcefully conveyed to Mukherjee, not 'threateningly' but as 'candid advice'.

"India needs a stable and predictable taxation structure," the paper quoted Osborne, as saying.

He stressed that the UK did not want India to provide a 'no-tax environment', but to facilitate investment by levying taxes in a foreseeable and reasonable manner. (ANI)

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