Kraft in Indian tax evasion probe over its takeover of Cadbury

FOOD giant Kraft could face tax evasion charges over its takeover of Cadbury India.

The Indian Finance Ministry has ordered an eight-week probe into the takeover, which was part of Kraft’s $19.6bn acquisition of Cadbury in February last year.

The US firm will be desperate to avoid a protracted legal battle like the one that has blighted Vodafone since its 2007 purchase of Hutchison Whampoa’s mobile business in the country.

A public interest law suit has been filed by a New Delhi lawyer who claims Kraft “completely and illegally avoided” paying tax on the deal. Ved Prakash says Kraft has deprived the exchequer by failing to pay tax on the acquisition.

Cadbury India is key to Kraft’s plans for the firm, with the subsidiary already the country’s largest confectioner in a rapidly expanding market. Kraft was not available for comment last night.

It is not clear how big any potential claim would be but the lawyer involved said it could be sizeable.

Vodafone is appealing a ruling that it owes $2bn in capital gains tax.