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Cairn Energy hit with $4.4bn bill

International Business
Wed, 16 Mar 2016

New Delhi: Indian authorities have sent Cairn Energy a tax bill for $4.4 billion, the company said yesterday, the latest chapter in a long-running row that has stoked foreign firms’ fears of retrospective tax demands.

The British oil explorer has been locked in a dispute with the Indian government since 2014 over
$1.6bn authorities say it owes in backdated tax.

Announcing preliminary results, Cairn Energy said it had received an “assessment order” which includes the addition of 188bn rupees ($2.8bn) in interest dating back to 2007.

The tax demand relates to internal restructuring undertaken by the group in 2006, before it floated its former India division Cairn India on the Bombay Stock Exchange.

Cairn Energy staunchly rejects the tax claim and the matter has now gone before an arbitration panel.

“The tax issue is now more than two years old and we have commenced international arbitration proceedings to settle the dispute,” a spokesman for the oil explorer said.

“Cairn is claiming full compensation for the $1bn value of which its shareholders have been deprived,” he said.

Cairn Energy still holds a stake of around 10 per cent in the India firm, which New Delhi has prevented it from selling until the dispute is resolved.

Any assets the Indian government could seek to seize are limited to about $477 million, the company said.

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