The FOM is still demanding 15 million euros from India
While the Indian Grand Prix has been off the calendar for two seasons, the FOM is still seeking the payment of 15 million euros that it believes is owed to them.
India had great ambitions to bring in F1. A circuit was therefore created from scratch to meet the comfort requirements imposed by the sport, which was supposed to come for an initial period of at least five years, between 2011 and 2015.
In order to finance such a project, Jaiprakash, the parent company of Jaypee, the event promoter, had subscribed to a stand-by letter of credit, which the FOM now wants to invoke for the guarantee since the contract is set to expire at the end of the year. However, the Indian tax authorities consider it a royalty, while the FOM considers it simply regular income.
The difference is significant from a tax perspective. Indeed, according to the bilateral agreements between the United Kingdom and its former colony, income is tax-exempt whereas royalties are subject to taxation.
Therefore, the Bombay High Court, which was seized, authorized the extension of the letter of credit guarantee from November 30, 2015, to March 31, 2016, to allow the different parties to resolve their dispute. This March deadline could be postponed again if the disagreement persists.
With the participation of www.racingbusiness.fr
