The tax liability on Ambani's telecom company registered in France - 'Reliance Atlantic Flag' was at least €151 million according to the French Newspaper Le Monde. Six months after the announcement that India would purchase 36 Rafale jets in a fly away condition, French tax authorities made a settlement for €7.3 million instead of €151 million.
In fresh revelations in the Rafale deal, French newspaper Le Monde reported that Anil Ambani’s French-registered telecom company was given tax waivers worth €143.7 million by local authorities, shortly after the announcement by Prime Minister Narendra Modi to buy 36 Rafale jets in fly away condition.
According to the newspaper, Ambani’s telecom company “Reliance Atlantic Flag France” was investigated by French tax authorities and found liable to pay €60 million between 2007 and 2010.
In an attempt to reach a settlement, Reliance had offered to pay €7.6 million, which was rejected by the authorities and upon further investigation for the period 2010 to 2012 an additional tax of €91 million was levied.
During a visit to Paris in April 2015, Prime Minister Narendra Modi made a surprise announcement for direct purchase of 36 Rafale jets in fly away condition in April 2014 citing “critical operational necessity” of IAF.
By this time the tax liability on Reliance was at least €151 million according to the newspaper. However, six months after the announcement, French tax authorities made a settlement for €7.3 million instead of €151 million.
According to this, between February and October 2015 as India and France began negotiations on the deal for the 36 jets, Ambani got a tax waiver of €143.7 million from the French.
In September 2016, India and France signed a €7.87 billion Inter-Governmental Agreement (IGA) in September 2016 which has a 50% offset clause to be executed by the French partners.
Dassault Aviation, the manufacturer of Rafale jets, chose Ambani’s Reliance as an offset partner to execute its share of offset obligations. There have been questions on this selection as Reliance has no experience in the defence sector.
Last year, Francois Hollande who was the French President when the announcement on Rafale was made in 2015, told a French news outlet, Mediapart.fr that his government didn’t have “a choice” in the selection of Reliance Defence as the offset partner in the Rafale deal.
(Inputs: The Hindu)