Hostility to Mittal may cost Luxembourg pact Sidhartha [ Tuesday, February 14, 2006 12:24:20 am TIMES NEWS NETWORK ]
NEW DELHI: Steel king L N Mittal's boardroom battle for Arcelor may turn into a fight between India and Luxembourg.
Indian government plans to review signing the proposed double taxation avoidance agreement (DTAA) that is currently being negotiated with the Duchy of Luxembourg, in an apparent tit-for-tat response to the latter's hostility towards Mittal's bid for Arcelor.
Top sources in the government said the decision to use the proposed agreement as a bargaining lever has been mooted by the commerce and industry ministry, which will soon take up the matter with the finance ministry. North Block is responsible for negotiation of DTAAs with various countries.
India's permanent mission to the European Union in Brussels has concurred with the planned retaliation measure against Luxembourg. Luxembourg is one of the founding members of the European Union and a DTAA will help investors from the two countries take credit for taxes paid in the other country.
The move comes in the wake of the Duchy of Luxembourg moving to bring a legislation empowering the board of companies to decide on takeovers without going to shareholders for their opinion.