NEWBURY: Vodafone Group, which has resisted setting aside money for a $2.2 billion tax bill in India, may make a provision to cover the legal risks, chief financial officer Andy Halford said in an interview. The world's second-largest mobile-phone operator is consulting on the need for a provision after an amendment by India's government to its tax law made the company potentially liable for the payment, Halford said. A decision will be made by November, he said.
"The situation has changed and we are looking at it," Halford said from Vodafone's headquarters in Newbury, England. The company's test over whether to take a provision "is now being applied differently against a recently introduced, albeit retrospective, legislation."
The potential tax payment would add to Vodafone's costs of investing in the second-largest wireless market. The operator in January defeated the initial government demand for taxes stemming from its 2007 acquisition of Hutchison Whampoa's Indian operations in the country's top court. In March, the government unveiled an amendment to the law to retrospectively tax cross-border transactions dating back to April 1, 1962. Vodafone's shares fell as much as 1.5% to 173.30 pence and traded 1.3% lower as of 10:24 am in London. The stock is the biggest decliner by index points on the FTSE 100 Index, which slipped 0.4%.
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