Asia Satellite (HKG:1135): unfavourable finance bill passed

Asia Satellite Telecommunications (HKG:1135) (AST) has released a further announcement in relation to the finance bill previously proposed in India which, when passed by the Indian Parliament, would result in unfavourable consequences to the AST group's current tax proceedings in the Indian Courts.

It has come to the attention of AST's board of directors that the finance bill was recently passed by the Indian Parliament and was enacted with retrospective effect after presidential assent was given to it. Under the Indian Income Tax Act (as amended by the finance bill), revenues received from the provision of satellite transponder capacity to the AST group's customers which carry on business in India or earn income from any source in India will be charged to tax in India.

As the finance bill was enacted with retrospective effect, this would result in unfavourable consequences to the AST group's current tax proceedings in the Indian Courts where orders in favour of the group were made in the past. However, the portion of revenue earned by the group that would be deemed to be Indian sourced is yet to be decided by the Indian Courts and is therefore still uncertain.

The AST group is currently seeking clarifications from its legal and tax advisors in order to assess the potential exposure of the above to the group and is evaluating various options available to it to deal with the issues arising from the retrospective amendments to the Indian Income Tax Act introduced by the finance bill.
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