IT Department Notice to Vodafone
The IT department has slapped a notice on Vodafone asking the company to pay Rs 14,200 crore in tax bill, which is still undergoing international arbitration proceedings, or it may face asset seizures.
According to Bloomberg News, deputy commissioner of income tax informed the company’s Vodafone International Holdings BV Dutch unit of its dues in a letter dated 4 February. Any overdue amounts, even from overseas companies, may be recovered “from any assets of the non-resident which are, or may at any time come, within India,” the agency said.
The UK-based company said that the dispute was currently the subject of international arbitration, but expressed its surprise and dissent on the development.
Why Vodafone has been asked to pay tax? – In 2007 Vodafone International Holdings BV decided to expand its footprint in the Indian mobile phone market by buying out Hutchison Essar. But it decided to take the roundabout route; its subsidiary exchanged cash for shares with a similar holding company for Hutchison Essar, in far off Cayman Islands.
The Supreme Court ruled in 2012 that Vodafoneâ€™s actions were â€œwithin the four corners of lawâ€. It also advised Indian taxmen to â€œlook atâ€ the transaction instead of â€œlooking throughâ€ it to attribute motives to the deal. What the Indian government saw however was over â‚¹20,000 crore in unpaid taxes, interest and penalty slipping out of its hands.
The government came up with the General Anti-Avoidance Rule (GAAR). This rule basically said that the government could dig up past deals, all the way back to 1962. There was a huge hue and cry and GAAR was postponed to 2016.
What is the status of the case? – The Indian government stated in 2014 that existing tax disputes, would be resolved through existing judicial process. The British telecom major had dragged the government to international arbitration and invoked the Netherlands-India bilateral investment protection treaty following the governmentâ€™s move to tax the company. The matter is currently before an arbitration panel, to which both the government and the company have named their judges.
Source: Economic Times, TheHindu
8th Round of Delhi Dialogue
Delhi Dialogue is scheduled to begin on 17th Feb, Wednesday with focus on impact of the U.S.- led mega trading and political blocs on India-ASEAN ties.
One emerging mega bloc, the Trans Pacific Partnership (TPP), received a major boost recently with the joining of Brunei, Vietnam, Malaysia and Singapore. Diplomats are concerned that India will have to adjust to the new set of security and economic rules as increasing number of Southeast Asian countries join TPP, which began taking shape with the arrival of President Barack Obama to the White House in 2009.
Apart from economic affairs, the Dialogue is expected to feature extensive discussions on cyber security, counter-terror, and political coordination for multilateral platforms like the U.N.
What is the Delhi Â Dialogue? – The India-ASEAN Delhi Dialogue is an annual international conference of political and economic leaders, officials, academics and opinion-makers of ASEAN countries with their Indian counterparts to discuss how to intensify and broaden political, strategic, economic and civil society interaction between the two regions.
With domestic imperatives of resilience converging with regional imperatives of peace and stability, the members of ASEAN and India now look to expand areas of cooperation.
Since its first edition in 2009, Delhi Dialogue has evolved into a useful forum for brainstorming on all aspects of the ASEAN-India relationship and has contributed immensely towards strengthening of the Strategic Partnership established in 2012.
Source: TheHindu, DelhiDialogue.org
Indigenous Anti-radiation missile trial
Captive flight trials of an advanced, state-of-the-art Air-to-Surface Anti-Radiation Missile (ARM) are planned for April-May this year, and the maiden flight test by year-end by the missile technologists of the Defence Research and Development Organisation.
The range of the missile is 100 to 125 km and it will be mounted on combat aircraft Sukhoi (Su-30) and Tejas-Light Combat Aircraft.
According to DRDO sources, scientists will evaluate the performance of the seeker, navigation and control system, structural capability and aerodynamic vibrations during the captive flight trials. These will be followed by ground testing and the missile will be fired from Su-30 during the actual flight trial by year-end.
The entire missile is being developed indigenously, including the seeker. The missile will be inducted in about two years after conducting a number of developmental trials.
What is an Anti-Radiation missile? – Â An anti-radiation missile (ARM) is a missile designed to detect and home in on an enemy radio emission source. Typically, these are designed for use against an enemy radar, although jammers and even radios used for communications can also be targeted in this manner.
Only a few countries, including the U.S. and Germany, have ARMs at present.
Source: TheHindu, Wikipedia
Saudi Arabia, Russia, agree to freeze oil output
Top global Â oil producers Saudi Arabia and Russia agreed on Tuesday Â 16th Feb to freeze oil output in a bid to shore up prices after a 70 per cent drop due to chronic oversupply.
Saudi Oil Minister Ali al-Naimi said the move â€” which is conditional on other major producers joining in – was designed to stabilise the market following the dramatic price fall since mid-2014.
The announcement followed a closed-door meeting in Doha between Saudi Arabia â€” the de facto leader of OPEC – Venezuela, Qatar and Russia, which does not belong to the oil cartel.
Why have the oil prices plummeted?
1) Over Supply – The International Energy Agency said that the worldâ€™s stockpile of oil sits at a record three billion barrels and it has been growing.Demand growth has risen to a five-year high of nearly 2 [million barrels a day]â€¦but gains in demand have been outpaced by vigorous production from OPEC and resilient non-OPEC supply.
2) The Dollar – Rise in dollar has in the run up to stopping of quantitative easing and hike in interest rate has hit the oil prices.
3) Shale production – The boom in shale industry in the US have made reduced its imports as well as contributing to the global oil supply.
4) Global Slowdown – The demand for oil has slowed down owing to a gradual slowdown in global economy. Europe has been experiencing sluggish growth and China has also cut its growth forecasts shifting to sustainable growth rates.
Why top producers did not act?
1) Geo-Economies – Saudi Arabia and other OPEC producers have been refusing to reduce output in a bid to drive less-competitive players, in particular U.S. shale oil producers, out of the market. It is a fight for geo-economic oil hegemony that the middle east countries have enjoyed for a long time.
2) Geopolitics – OPEC Â has also been facing internal fissures owing to Iran-Saudi Arabia tensions in the run up to the nuclear deal. Saudi Arabia has a lower cost of production Â per barrel and can bear losses as Â compared to the troubled economies of Iran and Russia
Source: TheHindu, MarketWatch
Take the Quiz below to know your preparation Level!