The government will defend a notice for arbitration from Vodafone Group Plc in a more than $2 billion tax dispute, Finance Minister P. Chidambaram said on Thursday.
Vodafone said on Wednesday it had filed for an international arbitration against the Indian government, after the two sides failed to find a solution to the long-running tax dispute through talks.
Vodafone, which last month took full ownership of its India unit after buying the 15.5 percent it did not already own, filed for the arbitration on April 17, it said in a statement on Wednesday. It did not give details.
The tax dispute stems from Vodafone's acquisition of Indian mobile assets from Hutchison Whampoa in 2007.
In 2012, the Supreme Court ruled that Vodafone was not liable for payment of any tax on the acquisition. The government later that year changed the rules to enable it to tax deals that had already been concluded.
Uncertainties over policy in India have unsettled investors, and tax claims on foreign companies have been a major concern. IBM Corp, Royal Dutch Shell Plc and Nokia Oyj are among foreign firms contesting local tax claims.
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