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France says tax settlement with Reliance France done as per legislative and regulatory framework, denies links with Rafale deal

Reliance Communications and Indian government has also denied any link between the tax waiver and Rafale deal

French Ambassador to India Alexandre Ziegler has clarified that a tax settlement granted to a French subsidiary of Reliance Telecom was done within legislative and regulatory framework of the country, any accusations of political interference are baseless.

Today prominent left-wing newspaper in France Le Monde had created a big controversy in India by publishing a report saying that France government had waived taxes of Reliance Flag Atlantic France SAS amounting to 143.7 million euros in 2015. Using a language that reminds of Rahul Gandhi’s speeches, the report had said that when Anil Ambani’s Reliance was granted this waiver, the Indian government was negotiating the deal to purchase 36 Rafale jets from France in a government to government deal. The report even introduced Anil Ambani as a close friend of Prime Minister Modi, leaving no doubt about the intention of it when general elections are going on in India.

The report stated that French authorities had a total tax demand of € 151 million from Reliance Flag Atlantic France SAS, while the company offered to settle the dues at € 7.3 million. While France had earlier refused the offer, later they accepted it, thereby waiving a demand of € 143.7 million. They said that the waiver was granted six months after the Rafale deal was announced by PM Modi, making a direct connection between the two issues. The French report was widely reproduced by Indian media, giving the Congress party fresh ammunition in attacking the Modi government.

But the French Ambassador clarified that a global settlement was reached between the French tax authorities and Reliance Flag in a tax dispute pertaining to the period 2008-2012. He said that it was done as per common practice in tax administration, and it was done as per laws and rules of the country, denying any political influence in the decision.

Earlier, Reliance Communications had rubbished the report saying that the tax dispute with its French subsidiary pertained to the year 2008 and it was settled as per local laws. The company said that “the tax demands were completely unsustainable and illegal. Reliance denies any favouritism or gain from settlement.” A statement issued by the company said that Reliance Flag settled the tax disputes as per legal framework in France available to all companies operating in France.

The statement added that Reliance Flag was running in operating loss in the relevant period, and the tax demand by France was unjustified. “During the period under consideration by the French Tax Authorities in 2008-2012 (nearly 10 years ago), Flag France had an operating loss of Rs 20 crore (2.7 million euro)”, the company said. They added that “French tax authorities had raised a tax demand of over Rs 1,100 crore for the same period. 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.”

Reacting to the reports, the Defence Ministry has also issued a clarification dismissing the Le Monde report. A statement issued by the ministry said, “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. Any connections drawn between the tax issue and the Rafale matter is totally inaccurate, tendentious and is a mischievous attempt to disinform.”

While Le Monde accused that the tax waiver was linked with Dassault deal, they didn’t disclose a very relevant detail. One of the main competitors of Le Monde in France is Le Figaro, which has a center-right editorial line, and it is owned by the Dassault group. Therefore, the newspaper has a clear motive against the Dassault group, hence they should mention the rivalry in any report involving the group.

There are also allegations that Rahul Gandhi’s advisor Sam Pitroda is close with Xavier Niel, co-owner of Le Monde. It is interesting to note that Le Monde describes Sam Pitroda as “the father of India’s telecommunications network equipment”.

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