(Photo: AFP)
(Photo: AFP)

Defence ministry dismisses report of tax waivers by French government

  • Neither the period of the tax concession nor the subject matter of the concession relate even remotely to the Rafale procurement
  • India’s plans to buy 36 Rafale aircraft off the shelf in 2015 has attracted controversy with the opposition accusing the government of favouring big businesses

NEW DELHI : India’s defence ministry on Saturday dismissed as inaccurate a report in a French newspaper that said the French government had waived taxes for Indian industrialist Anil Ambani after India announced plans to buy 36 French built Rafale fighter aircraft off the shelf in 2015.

“We have seen reports drawing conjectural connection between tax exemption to a private company and procurement of Rafale fighter jets by Government of India," the statement said.

“Neither the period of the tax concession nor the subject matter of the concession relate even remotely to the Rafale procurement concluded during the tenure of the present Government," the ministry said,

“Any connections drawn between the tax issue and the Rafale matter is totally inaccurate, tendentious and is a mischievous attempt to disinform," it added. India’s plans to buy 36 Rafale aircraft off the shelf in 2015 has attracted controversy with the opposition accusing the government of favouring big businesses in the award of offset contracts that come as spinoffs in big defence deals.

The statement was in response to the report in the Le Monde newspaper on Saturday which said that Anil Ambani’s France-based company was given a tax waiver of 143.7 million euros, six months after Prime Minister Narendra Modi announced the deal for purchasing 36 fighter jets in April 2015 — suggesting a quid pro quo in the matter.

Anil Ambani’s Reliance Defence is an offset partner in India’s Rafale jet deal with France announced by Modi.

Ambani’s France-based Reliance Flag Atlantic France is a subsidiary of Reliance Communications and deals with under-sea cabling.

The company was investigated by French tax authorities and found liable to pay 60 million euros in taxes for the period between 2007 and 2010. Reliance had made an offer to pay 7.6 million euros as a settlement. The French tax authorities, however, refused this offer and conducted another investigation between 2010 to 2012. And after this, the French authorities demanded the payment of an additional 91 million euros in taxes, the French newspaper reported.

A statement from Reliance communications on Saturday said the “Reliance Flag tax issue pertains to 2008, nearly 10 years old," -ie predating India’s Rafale deal with France— and “the tax demands were completely unsustainable and illegal."

Denying any favoritism or gain from settlement, the statement said that “Reliance Flag settled tax disputes as per legal framework in France available to all companies operating in France."

“During the period under consideration by the French Tax Authorities - 2008-2012i.e. nearly 10 years ago, Flag France had an operating loss of 20 Crs (i.e. Euro 2.7 million). French tax authorities had raised a tax demand of over 1100 crore for the same period. As per the French tax settlement process as per law, a mutual settlement agreement was signed to pay 56 crore as a final settlement," the Reliance statement said.

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