India's High-Profile Tax Tussles: A Closer Look at Multinational Disputes

India has been at the center of several high-profile tax disputes involving multinational companies like Tiger Global, Kia, Volkswagen, Vodafone, Cairn Energy, Pernod Ricard, and BYD. These cases highlight issues of tax avoidance, duty evasion, and the complex legal dance over international tax treaties.

Foreign enterprises often express concerns about tax ambiguity in India and the protracted litigation concerning alleged duty evasion on imports or levies tied to major M&A transactions. Highlighted here are some prominent tax disputes within the country.

TIGER GLOBAL: India's Supreme Court declared on January 15 that Tiger Global owes taxes on its $1.6 billion divestment of a Flipkart stake to Walmart in 2018. The decision sets a precedent for corporate reliance on international tax treaties, particularly concerning cross-border transactions. Despite asserting tax exemption under the India–Mauritius treaty, the court identified the deal as an "impermissible tax avoidance arrangement."

KIA, VOLKSWAGEN, & OTHERS: South Korea's Kia is accused of circumventing $155 million in taxes by misclassifying imported car components, a charge it disputes. Similarly, Volkswagen has legally challenged a $1.4 billion tax notice over component import classification, cautioning that excessive taxation could deter foreign investments. Other notable battles include Vodafone's famed $2 billion tax demand, which culminated in international arbitration favoring Vodafone, and Cairn Energy's settlement post a prolonged dispute. Amidst controversy, Pernod Ricard and BYD face their respective tax challenges, underscoring sustained tensions between multinational firms and Indian tax authorities.