Cairn to drop litigations against India within days of getting USD 1 billion refund
CEO Thomson stated that Cairn had maintained a "good, open, and transparent channel of contact with the Government of India" in order to resolve the retro tax problem.
Cairn Energy PLC, located in the United Kingdom, announced on Tuesday that it would abandon action to seize Indian properties in countries ranging from France to the United States within a few days after receiving a USD 1 billion return due to the repeal of retroactive tax legislation. The company that made India's most extensive onshore oil discovery called the legislation passed last month to repeal a 2012 policy that gave the tax department the authority to go back 50 years.
According to media reports, Cairn CEO Simon Thomson indicated that the offer to refund money seized to enforce retrospective tax demands, rather than abandoning all cases against the government, is "acceptable to us." Thomson stated that Cairn had maintained a "good, open, and transparent channel of contact with the Government of India" in order to resolve the retro tax problem. After the reimbursement, Cairn would withdraw cases to seize diplomatic residences in Paris and Air India planes in the United States, he said, adding that Cairn"s shareholders agree with accepting the offer and moving on.
To restore India's tarnished reputation as an investment destination, the government adopted new laws authorising the cancellation of Rs 1.1 lakh crores in outstanding claims against international corporations. The companies include telecoms group Vodafone, pharmaceuticals company Sanofi, which was acquired by AB InBev last month, and brewer SABMiller, which AB InBev now owns, and Cairn. Approximately Rs 8,100 crore collected from corporations under the defunct tax provision would be returned the companies agree to discontinue ongoing litigation, including demands for interest and penalties. Cairn is only responsible for Rs 7,900 crore of this.
Cairn stated in its half-yearly report on Tuesday that it would return up to USD 700 million to "shareholders via special dividend and repurchase" from the Rs 7,900 crore (USD 1.06 billion) it is scheduled to get from the Indian government. In December, an international arbitration panel rejected a tax charge of Rs 10,247 crore on a 2006 reorganisation of Cairn's India before its listing and ordered the Indian government to restore the value of shares seized and sold, dividend confiscated, and tax refund withheld.