Vodafone to Settle Indian Tax Dispute?

LONDON -- In some long-awaited news for shareholders of Vodafone (LSE: VOD  ) (NASDAQ: VOD  ) , officials from the Indian government have suggested that its ongoing tax dispute with the telecommunications company may be settled as soon as next week.

India's finance minister Palaniappan Chidambaram has stated that the government will seek advice from the Cabinet, which will take a final view on the 1.3 billion pound Vodafone tax case and consider its offer for settlement.

This dates back to early last year, when the country amended its income tax law to enable reimposition of taxes on overseas deals involving local assets, retrospectively affecting Vodafone's stake in Indian telecommunications company Hutchinson Essar that it took in 2007.

The declaration comes after prime minister David Cameron ended his visit to India, in which he voiced his support for Vodafone and other companies currently embroiled in tax disputes, such as Royal Dutch Shell. The country's television channel NDTV quoted Cameron as saying:

The tax system has to be fair to all. Every company needs to know about the tax implications of any deal. If the tax system becomes completely unpredictable, it becomes totally damaging for the business.

With this dispute hanging around Vodafone's metaphorical neck for almost a year now, some analysts have suggested that it has depressed the company's shares and that they might see a boost in price should a favorable outcome occur. Watch this space...

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