Cairn Energy in line for $1bn refund as India scraps tax law
Cairn Energy could be in line for a $1bn refund after the Indian government decided to scrap a controversial retrospective tax law.
The FTSE 250 company has been engage in a long-running tax dispute with India over the issue.
In recent months, the independent oil and gas firm has taken steps to seize some of the government’s assets while it awaits a $1.2bn payout.
The FT reported this evening that Nahedra Modi’s government hoped that scrapping the tax rule would improve relations with foreign firms.
“We want to give a message to the investors that the country believes in the stability and certainty of taxation,” Tarun Bajaj, revenue secretary, told journalists today.
“Taxation is a sovereign right and can’t be taken away. But we should use it sparingly, judiciously.”
He added that the government was prepared to return $1.2bn to a number of firms if they agreed to drop outstanding litigation.
Of this, $1bn is set to be returned to Cairn, and the remaining $270m to firms including Vodafone.
Shares in the firm were up 6.1 per cent today, and almost 30 per cent for the week.