London, Aug 19:
Scotland-based hydrocarbons explorer Cairn Energy Plc. Tuesday said it was in talks with Indian authorities to amicably settle a tax dispute dating back to when it listed its Indian entity in 2006.
Cairn has since sold nearly 90 percent stake in the Indian arm.
“While interactions are ongoing with Indian Income Tax Department, Cairn is currently unable to access the value in its 10 percent residual shareholding in Cairn India valued at $1.1 billion at 30 June 2014,” said Simon Thomson, chief executive, Cairn Energy Plc.
“Cairn is continuing to take all necessary steps to protect shareholders’ interests,” Thomson said in the half-yearly report announcement, following the presentation of results for the first six months of this year.
In January, the Income-Tax Department had in an order held that the Edinburgh-based firm made capital gains of Rs.24,503.50 crore when it transferred its entire India business from subsidiaries incorporated elsewhere, including tax havens like Jersey, to the newly incorporated Cairn India (CIL) in 2006.
However, no tax demand has been raised so far.
“There were some provisions in that budget in respect to dealing with the retrospective tax issue,” Thomson said.
“We are waiting for clarification on those provisions,” he added.
“Cairn continues to be restricted from accessing the value of its about 10 percent residual shareholding in CIL valued at $1.1 billion whilst interaction with the Indian tax authorities continues,” the company said in a statement.
Finance Minister Arun Jaitley in his maiden budget last month said no new tax demand will be raised using the controversial retrospective tax law introduced in 2008.