Shell India in tax dispute with authorities

Sun Feb 3, 2013 8:33pm IST

A Shell logo is seen at a petrol station in London January 31, 2013. REUTERS/Luke MacGregor

A Shell logo is seen at a petrol station in London January 31, 2013.

Credit: Reuters/Luke MacGregor

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REUTERS - Anglo-Dutch oil major Royal Dutch Shell Plc(RDSa.L) said its Indian unit has been in talks with local authorities over a tax dispute, making it the latest global company to have a run-in with tax officials in the country.

The Mint newspaper, citing a person familiar with the matter, reported on Saturday tax authorities accused Shell's Indian unit of underpricing a transfer of shares to a related overseas company by about $2.8 billion and thereby evading taxes.

Television channel ET Now carried a similar report last Thursday.

"Shell India tax experts have indeed been in discussions with the Indian tax authorities on this issue over the past week and do not agree with their views," a Shell spokesman said in a statement emailed in reply to a query from Reuters on the report in Mint.

"The tax officer has now made an assessment and passed an order which we have not yet received. We will review the order and initiate consequent appropriate actions," the spokesman said in an email late on Saturday to Reuters.

The response did not address all of the details raised in reports by Mint and ET Now.

Tax officials were not available for comment. Several calls to a spokeswoman of the tax department in Mumbai went unanswered.

The Shell India case comes amid uncertainty about the outcome of a more-than $2 billion tax dispute between Vodafone Group Plc(VOD.L) and the tax office that has dented corporate investor confidence in the country.

Vodafone, the largest corporate investor in India, has repeatedly clashed with authorities over taxes since it bought Hutchison Whampoa's(0013.HK) local mobile business in 2007. While the Supreme Court backed Vodafone's position that it does not owe tax on the deal, a subsequent law change enabled India to impose tax on mergers retrospectively.

Indian officials and Vodafone have held recent talks on the dispute.

(Reporting by Sumeet Chatterjee in MUMBAI; Additional reporting by Andrew Callus in LONDON; Editing by Tony Munroe and Sanjeev Miglani and Jeremy Laurence)

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