France waived taxes worth 143.7 million euros to a French-registered telecom subsidiary of Anil Ambani's Reliance Communications in 2015, months after India's announcement of buying 36 Rafale jets, French newspaper Le Monde reported today.
Reliance Communications rejected any wrongdoing and said the tax dispute was settled under a legal framework that is available to all companies operating in France.
The French newspaper said the French tax authorities accepted 7.3 million euros from Reliance Flag Atlantic France as a settlement against an original demand of 151 million euros. Reliance Flag owns a terrestrial cable network and other telecom infrastructure in France.
"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," the French embassy said in a statement. It further said, "This settlement was conducted in full adherence with the legislative and regulatory framework governing this common practice of the tax administration," the embassy said. It said the settlement was not subject to any political interference whatsoever.
Reacting to the report, the Defence Ministry said any connections drawn between the tax issue and the Rafale matter is totally inaccurate, tendentious and is a mischievous attempt to disinform.
"We have seen reports drawing conjectural connection between tax exemption to a private company and procurement of Rafale fighter jets by government of India. 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 Defence Ministry said in a statement.
Prime Minister Narendra Modi had announced India would buy a batch of 36 Rafale jets after talks with the then French President Francois Hollande on April 10, 2015 in Paris. The final deal was sealed on September 23, 2016.
The Congress has been alleging massive irregularities in the deal, saying the government was procuring each aircraft at a cost of over Rs 1,670 crore as against Rs 526 crore finalised by the UPA government when it was negotiating the deal.
The Congress has also been targeting the government over selection of Anil Ambani-owned Reliance Defence as an offset partner for Dassault Aviation, the manufacturer of Rafale. The government has rejected the allegations.
The French newspaper said the company was investigated by French tax authorities and found liable to pay 60 million euros in taxes for the period 2007 to 2010.
However, Reliance offered to pay 7.6 million euros only as a settlement, but the French tax authorities refused to accept the amount. The authorities conducted another probe for the period 2010 to 2012 and told the company to pay an additional 91 million euros in taxes, the report said.
It said by April 2015, the total amount owed by Reliance to the French authorities in taxes was at least 151 million euros.
In October, six months after PM Modi announced the Rafale deal in Paris, the French authorities accepted 7.3 million euros from Reliance as a settlement as against the original demand of 151 million euros.
A spokesperson of Reliance Communications said the tax demands were "completely unsustainable and illegal" and that the company denied any favouritism or gain from the settlement.
"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 Rs 20 crore (Euro 2.7 million). French tax authorities had raised a tax demand of over Rs 1,100 crore for the same period," the official said.
"As per the French tax settlement process as per law, a mutual settlement agreement was signed to pay Rs 56 crore as a final settlement," he said.
Disclaimer: NDTV has been sued for 10,000 crores by Anil Ambani's Reliance Group for its coverage of the Rafale deal.