In a controversial development, French newspaper Le Monde has reported that Anil Ambani’s Reliance Group was able to secure a favourable tax settlement from French authorities. According to the report, Ambani saved more than 140 million euros (nearly Rs 1100 crore) in taxes. Soon after the report caught public attention, Reliance Communications and the Defence Ministry of India rubbished the claims made by the French newspaper in separate statements.
What is the claim?
According to the report, Reliance Flag Atlantic France, a subsidiary of Ambani’s RCom in France, was investigated by French tax authorities. The authorities found that the company was liable to pay 60 million euros in taxes for the period 2007 to 2010.
The company was investigated by French tax authorities and found liable to pay 60 million euros in taxes for the period 2007 to 2010.
— julien bouissou (@jubouissou) April 13, 2019
Reliance offered to pay a settlement of 7.6 million euros but that was rejected by the authorities. Later, in another investigation conducted between 2010 to 2012, the authorities found the company liable to pay an additional 91 million euros in taxes.
Reliance offered to pay 7.6 million euros as a settlement. The French tax authorities refused. They conducted another investigation for the period 2010 to 2012 and asked for an additional 91 million euros in taxes.
— julien bouissou (@jubouissou) April 13, 2019
By the time the Rafale deal was underway, Reliance owed at least 151 million euros to the French state. And six months after the Rafale deal announcement in October 2015, the French tax authorities accepted the old settlement amount of 7.6 million euros and thus Reliance enjoying tax benefits of Rs 143.7 Million euros.
Six months after Modi’s Rafale announcement, the French tax authorities accepted 7.3 million euros from Reliance as a settlement, instead of the much bigger sum of 151 million euros.
— julien bouissou (@jubouissou) April 13, 2019
The French journalist who reported on the issue said, “…between February and October 2015, while the French were negotiating the Rafale contract with India, Anil Ambani enjoyed a tax waiver of 143.7 million euros from the French state.”
Denial of the claims
Reliance, Ministry of Defence (MoD) & French government in separate statements denied the claims made by the French newspaper.
Claiming to be within the confines of the law, Reliance Communications (RCom) said in its statement, “During the period under consideration by the French Tax Authorities – 2008-2012 i.e.., nearly 10 years ago, Flag France had an operating loss of ₹20 Crores. French tax authorities had raised a tax demand of over ₹1100 Crores for the same period. As per the French tax settlement process as per law, a mutual settlement agreement was signed to pay ₹56 Crores as a final settlement.”
The statement further said, “Reliance Flag tax issue pertains to 2008 which was 4 years before 2012, when the procurement of Rafale Aircrafts was finalized and the contract was officially awarded to Dassault Aviation.”
The Defence Ministry in its statement said, “Neither the period of the tax concession nor the subject matter of the concession relates even remotely to the Rafale procurement concluded during the tenure of the present government.”
“Any connections drawn between the tax issue and the Rafael matter is totally inaccurate, tendentious and is a mischievous attempt to disinform.”, added the ministry.
The Ambassador of France to India, Alexander Ziegler, too denied the claims in a couple of tweets:
A global settlement was reached between the French tax authorities and Reliance Flag, a telecom company, in a tax dispute pertaining to the period 2008-2012 (1/2).
— Alexandre Ziegler (@FranceinIndia) April 13, 2019
This settlement was conducted in full adherence with the legislative and regulatory framework governing this common practice of the tax administration. It was not subject to any political interference whatsoever(2/2).
— Alexandre Ziegler (@FranceinIndia) April 13, 2019
Also Read: Rafale Deal: SC Dismisses Objection Raised By Centre; Says ‘Leaked Documents’ Admissible
