Kraft Foods could have to pay taxes to Indian authorities after its $19 billion takeover of Cadbury last year.
According to Reuters, last month a New Delhi-based law firm, on behalf of social activist Ved Prakash, filed writ petition, saying Cadbury evaded substantial tax liability in India and now owes the government.
“We were made aware that a public interest petition was filed in the High Court of Delhi. We understand that the court has directed the petitioner to approach the government to look into the relevant issues,” says Ransom Dsouza, spokesperson for Kraft Foods. “Kraft Foods is fully committed to complying with Indian law.”
Kraft purchased the British confectioner last year because of its strength in the emerging markets in India and Latin America.
This isn’t the first time India has cited a company for not paying taxes. Last year Indian tax authorities wanted Vodafone to pay $2.5 billion on its 2007 purchase of Hutchison Whampoa Ltd, who had a mobile business in the country.
"These types of cases are something the Indian authorities have been pursuing for the past two or three years, but it is not a widespread international practice," Abhishek Goenka, a partner at BMR Advisors in Bangalore, told Reuters.
While Vodafone currently is fighting their case in high court, it remains to be seen where Kraft Foods will end up.
For more information visit www.kraftfoodscompany.com