New Delhi, Apr 13 (Agencies): French newspaper Le Monde has reported that France waived taxes worth 143.7 million euros to a French-registered telecom subsidiary of Anil Ambani's Reliance Communications in 2015. This happened months after India's announcement of buying 36 Rafale jets.

The French newspaper claimed that the French tax authorities accepted 7.3 million euros from Reliance Flag Atlantic France as a settlement as against original demand of 151 million euros. Reliance Flag owns a terrestrial cable network and other telecom infrastructure in France. Prime Minister Narendra Modi had announced the procurement of 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 23 September, 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 it was French tax authorities refused to accept the amount. The authorities conducted another probe for the period 2010 to 2012 and asked 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 Modi announced in Paris about the Rafale deal, the French authorities accepted 7.3 million euros from Reliance as a settlement as against the original demand of 151 million euros.

RCom rubbishes report

However, Reliance Communications rejected any wrongdoing and said the tax issue of its subsidiary Reliance FLAG Atlantic France SAS pertained to the year 2008 and had been settled as per the local laws, much before the Indian government decided to purchase Rafale jets from French company Dassault.

"Reliance Flag tax issue pertains to 2008, nearly 10 years old," the company said.

"Reliance Flag says the tax demands were completely unsustainable and illegal. Reliance denies any favouritism or gain from settlement," it added.

The statement added that the Reliance Flag settled the tax disputes as per legal framework in France available to all companies operating in France.

"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).

"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," the company said.

France says tax issue of Anil Ambani firm settled as per law

France said on Saturday that the tax issue of industrialist Anil Ambani's France-based company Reliance Flag pertaining to the period 2008-2012 had been settled in "full adherence with the legislative and regulatory framework" and asserted there was no "political interference whatsoever".

"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," French Ambassador to India Alexandre Ziegler tweeted.

"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," he added in another tweet.

The French envoy's statement came in the wake of a media report that claimed that taxes of the company to the tune of 143.7 million euros were waived by the French authorities "just a few months" after Prime Minister Narendra Modi announced the decision to buy 36 Rafale fighter jets in 2015.

The Reliance Communications of Anil Ambani rubbished the media report, saying the tax issue of its subsidiary Reliance FLAG Atlantic France SAS pertained to the year 2008, much before the Indian government decided to purchase Rafale jets from French company Dassault.

"Reliance Flag tax issue pertains to 2008, nearly 10 years old," the company said in a statement.

"Reliance Flag says the tax demands were completely unsustainable and illegal. Reliance denies any favouritism or gain from settlement," it added.

The statement added that the Reliance Flag settled the tax disputes as per legal framework in France available to all companies operating in that country.

"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 (i.e. Euro 2.7 million). 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," the company said.

The deal for procurement of 36 Rafale fighter jets from Dassault was announced in April 2015 during the visit of Prime Minister Modi to Paris.

Flag France owns a terrestrial cable network and other telecom infrastructure in France.