India Needs to Repudiate Retrospective Tax Laws: Fund manager

New Delhi: India needs to repudiate retrospective tax laws to get the much-needed foreign investments for achieving double digit growth rate, said a USD 30 billion Los Angeles-based fund manager. Stan Majcher, portfolio manager and principal, Hotchkis and Wiley Capital Management, said the sooner the government resolves the tax issues facing UK firms Vodafone and Cairn Energy plc, sooner international investors will be more comfortable spending their money in India. The fund holds 6.75 per cent stake in Cairn Energy plc, which is facing a Rs 10,247 crore tax liability because of retrospective tax. "Repudiating retrospective laws and adopting international norms on taxation would allow the international investment community to see that the Modi government is delivering on its pre-election promise to eradicate so called tax terrorism," he said. While Vodafone has started international arbitration to resolve a long-running Rs 14,200-crore tax dispute over its 2007 purchase of Hutchison Whampoa Ltd's Indian assets, Cairn Energy faces the tax demand over 2006 transfer all its India assets to a new company, Cairn India.."Growth requires billions of investment that is hampered by these retrospective tax cases. While Cairn and Vodafone are in the headlines, the investment needed to achieve the Prime Minister Narendra Modi administration's goal of double-digit GDP growth will not happen," Mr Majcher said. India needs investment that will only happen if investors can rely on the basic rules of law, he said. "Cairn clearly followed the law, to the point that its reorganisation nine years ago was approved by the government of India. When the government changes the rules after the fact, it violates the most basic rules that support investment and growth," he said. He said it was now time for India to send a message to all international investors that retrospective tax is "dead and buried once and for all." "Many investments needed to finance India's growth will not happen if retrospective laws are possible. The country would benefit enormously from significant foreign direct investment to aid growth if these issues are settled as quickly as possible," he said. While Vodafone tax issue has been referred to arbitration, the government is yet to join an arbitration initiated by Cairn. "International companies such as Cairn and Vodafone have resorted to international arbitration to resolve so called tax issues dating back to the last decade. The sooner the Government of India sorts out retrospective tax issue the sooner international investors will be more comfortable spending their money on the many opportunities that need investment in India," he added.

India Needs to Repudiate Retrospective Tax Laws: Fund manager

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