CK Hutchison (00001) ordered to pay HK$8.9bn tax by India

    CK Hutchison Holdings (00001) said its indirect wholly owned subsidiary Hutchison Telecommunications International Limited (HTIL) has received a draft assessment order (DAO) from the Indian Tax Authorities dated 24 November 2016.
  The DAO proposes to impose tax on HTIL on the alleged gains of about INR374 billion (HK$42.3 billion at the current exchange rate) in respect of the acquisition in 2007 by Vodafone International Holdings B.V. of the entire issued share capital of CGP Investments (Holdings) Limited from HTI (BVI) Holdings Limited, an indirect wholly owned subsidiary of HTIL. CGP held a chain of companies some of which carried on a telecommunications business in India. 
  In January 2012, the Supreme Court of India ruled in a dispute involving Vodafone and the ITA that the acquisition was not taxable in India. In May 2012, the Indian Parliament passed retrospective legislation which attempted to overturn the judgment and make the acquisition subject to tax in India. 
  The DAO has estimated the capital gains tax amount at about INR79 billion (HK$8.9 billion at the current exchange rate). Furthermore, the DAO states that the actual amount of tax and interest payable thereon by HTIL will be calculated when the final order is passed and that penalty proceedings have been initiated.
  HTIL believes that no assessment for the alleged capital gains tax can be validly imposed, and it has obtained legal advice that such assessment cannot create any liability for taxes, interest, penalties or otherwise that is legally enforceable.