New Delhi: UK based cairn energy Plc on Tuesday said it would drop litigation to confiscate Indian assets in countries ranging from France to the US within days of receiving a refund of $1 billion as a result of scrapping the retroactive tax law.
The firm, which gave India its biggest onland oil discovery, termed a law passed last month as “bold” to repeal the 2012 policy, which gave the tax department the power to go back 50 years and slap a capital gains levy. Granted, where ownership had changed hands overseas, but the trading assets were in India.
Cairn CEO Simon Thomson told PTI in an interview from London that the proposal to return the confiscated money to implement the retrospective tax demand in exchange for the removal of all lawsuits against the government is “acceptable to us.”
After the refund, Cairn will drop the diplomatic apartment in Paris and the seizure of Air India airplanes in the US in a “matter of days” after the refund, he said, adding that Cairn’s shareholders have agreed to accept the offer and move forward. .
“Some of our core shareholders like BlackRock and franklin templeton agree (to this). Our idea is supported by our core shareholders (that), on balance it is better to accept it and go ahead and be pragmatic. Instead of continuing something negative for all parties which may go on for many years,” he said.
Seeking to repair India’s damaged reputation as an investment destination, the government last month enacted new legislation to forgo Rs 1.1 lakh crore in outstanding claims against multinationals such as the telecom conglomerate. vodafone, pharmaceuticals company Sanofi and brewer SABMiller, now owned by AB InBev and Cairn.
Around Rs 8,100 crore collected from companies under the repealed tax provision is to be refunded if the firms agree to drop the outstanding litigation including interest and penalty claims. Of this, Rs 7,900 crore is due only to Cairn.
Thomson said, “Once we get to the final solution, part of that proposal is we drop everything in terms of litigation. We can do it in a very short amount of time, just a few days or something.” ” “So we’re preparing based on getting this resolution early, leaving all these matters behind and leaving all of these behind.”
He said that all enforcement proceedings were brought due to Indian governmentRefusing to honor an international arbitration award asking it to refund the value of the money confiscated to enforce a retrospective tax demand shall be quashed.
“Everything will be dropped. There will be no more trial, that’s all. That will clear up the matter,” he said.
Cairn, in its half-yearly report on Tuesday, said it would return $700 million to shareholders “through special dividends and buybacks” of the Rs 7,900 crore ($1.06 billion) it received from the Indian government.
“Payment of the tax refund will enable the proposed return to shareholders through a special dividend of up to $700 million USD 500 million and up to $200 million share buyback program. The remaining proceeds will be allocated for further expansion of the low cost, sustainable production base.”
Thomson said Cairn has a “good, open and transparent line of communication with the Indian government” on finding a solution to the retro tax issue. “Our aim was to get a resolution … something that would be acceptable to our shareholders.”
“We are delighted when the Government of India has taken a very bold step in terms of enactment of the law,” he said. “The intention of the government, we are clearly connected with this, is to resolve this at the earliest. Hopefully, this means in the next few weeks. This is important not only for us and our shareholders but also for India . ”
This proposal will erase the ghost of retro tax and help move forward. Referring to the Barmer-based company’s oil exploration, he said, “We are keen to come back to Cairn in terms of success in Rajasthan. I think going forward will allow us to do that.”
In order to accept the terms of the new law in India, Cairn must withdraw its international arbitration award claims, interest and costs and cease all legal enforcement actions to be eligible for a refund.
“This would mean that we would waive the interest and penalty in terms of the original arbitration award. The important thing for us is that it returns the value that was taken from us. From our point of view it is the right thing to do, be practical, keep it Be behind us, go ahead,” he said, adding that this will help in eradicating the factor that is negatively affecting investments for many years to come.
The 2012 law was used to levy a total tax of Rs 1.10 lakh crore on 17 entities, including UK telecommunications giant Vodafone, but only Cairn, around 98 per cent, of the Rs 8,100 crore collected for implementing such demand. was from.
An international arbitration tribunal in December reversed its earlier listing levy of Rs 10,247 crore in taxes on Cairn’s 2006 reorganization of India, and asked the Indian government to refund the value of the forfeited and sold shares, forfeited dividends. Gone and the tax refund was withheld. This totaled more than $1.2 billion in interest and penalties.
The Indian government initially refused to honor the award, asking Cairn to move $70 billion of Indian assets from the US to Singapore in May to enforce the ruling, including taking flag carrier Air India Ltd to US court in May. forced to identify. In July a French court paved the way for Cairn to confiscate immovable property belonging to the Indian government in Paris.
He said that all these cases will be dropped.
The firm, which gave India its biggest onland oil discovery, termed a law passed last month as “bold” to repeal the 2012 policy, which gave the tax department the power to go back 50 years and slap a capital gains levy. Granted, where ownership had changed hands overseas, but the trading assets were in India.
Cairn CEO Simon Thomson told PTI in an interview from London that the proposal to return the confiscated money to implement the retrospective tax demand in exchange for the removal of all lawsuits against the government is “acceptable to us.”
After the refund, Cairn will drop the diplomatic apartment in Paris and the seizure of Air India airplanes in the US in a “matter of days” after the refund, he said, adding that Cairn’s shareholders have agreed to accept the offer and move forward. .
“Some of our core shareholders like BlackRock and franklin templeton agree (to this). Our idea is supported by our core shareholders (that), on balance it is better to accept it and go ahead and be pragmatic. Instead of continuing something negative for all parties which may go on for many years,” he said.
Seeking to repair India’s damaged reputation as an investment destination, the government last month enacted new legislation to forgo Rs 1.1 lakh crore in outstanding claims against multinationals such as the telecom conglomerate. vodafone, pharmaceuticals company Sanofi and brewer SABMiller, now owned by AB InBev and Cairn.
Around Rs 8,100 crore collected from companies under the repealed tax provision is to be refunded if the firms agree to drop the outstanding litigation including interest and penalty claims. Of this, Rs 7,900 crore is due only to Cairn.
Thomson said, “Once we get to the final solution, part of that proposal is we drop everything in terms of litigation. We can do it in a very short amount of time, just a few days or something.” ” “So we’re preparing based on getting this resolution early, leaving all these matters behind and leaving all of these behind.”
He said that all enforcement proceedings were brought due to Indian governmentRefusing to honor an international arbitration award asking it to refund the value of the money confiscated to enforce a retrospective tax demand shall be quashed.
“Everything will be dropped. There will be no more trial, that’s all. That will clear up the matter,” he said.
Cairn, in its half-yearly report on Tuesday, said it would return $700 million to shareholders “through special dividends and buybacks” of the Rs 7,900 crore ($1.06 billion) it received from the Indian government.
“Payment of the tax refund will enable the proposed return to shareholders through a special dividend of up to $700 million USD 500 million and up to $200 million share buyback program. The remaining proceeds will be allocated for further expansion of the low cost, sustainable production base.”
Thomson said Cairn has a “good, open and transparent line of communication with the Indian government” on finding a solution to the retro tax issue. “Our aim was to get a resolution … something that would be acceptable to our shareholders.”
“We are delighted when the Government of India has taken a very bold step in terms of enactment of the law,” he said. “The intention of the government, we are clearly connected with this, is to resolve this at the earliest. Hopefully, this means in the next few weeks. This is important not only for us and our shareholders but also for India . ”
This proposal will erase the ghost of retro tax and help move forward. Referring to the Barmer-based company’s oil exploration, he said, “We are keen to come back to Cairn in terms of success in Rajasthan. I think going forward will allow us to do that.”
In order to accept the terms of the new law in India, Cairn must withdraw its international arbitration award claims, interest and costs and cease all legal enforcement actions to be eligible for a refund.
“This would mean that we would waive the interest and penalty in terms of the original arbitration award. The important thing for us is that it returns the value that was taken from us. From our point of view it is the right thing to do, be practical, keep it Be behind us, go ahead,” he said, adding that this will help in eradicating the factor that is negatively affecting investments for many years to come.
The 2012 law was used to levy a total tax of Rs 1.10 lakh crore on 17 entities, including UK telecommunications giant Vodafone, but only Cairn, around 98 per cent, of the Rs 8,100 crore collected for implementing such demand. was from.
An international arbitration tribunal in December reversed its earlier listing levy of Rs 10,247 crore in taxes on Cairn’s 2006 reorganization of India, and asked the Indian government to refund the value of the forfeited and sold shares, forfeited dividends. Gone and the tax refund was withheld. This totaled more than $1.2 billion in interest and penalties.
The Indian government initially refused to honor the award, asking Cairn to move $70 billion of Indian assets from the US to Singapore in May to enforce the ruling, including taking flag carrier Air India Ltd to US court in May. forced to identify. In July a French court paved the way for Cairn to confiscate immovable property belonging to the Indian government in Paris.
He said that all these cases will be dropped.
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