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(Alliance News) - Shares in Cairn Energy PLC rose sharply on Thursday after the government of India set out amendments to rescind retrospective tax provisions which were introduced in 2012.
The stock closed up 26% at 158.50 pence in London on Thursday, the best performer in the FTSE 250.
The Scottish oil and gas company has been involved in a long-running tax dispute with India which stemmed from the 2012 law. In 2014, Indian tax authorities used the new legislation to claim unpaid taxes from Cairn India's 2006 corporate reorganisation.
In response, Cairn then commenced arbitration proceedings against the Indian government. In December, a three-member tribunal at the Permanent Court of Arbitration in The Hague ruled against India in this long-running tax dispute, in a positive development for the FTSE 250-listed firm.
The Indian government strongly opposed the decision and proceeded with filing an appeal against the award in March. The appeal against the verdict has been raised on grounds of sovereignty and tax avoidance by Cairn Energy.
Cairn hit back as it registered the award in other jurisdictions, including France and the US, and even identified assets it could seize if the Indian government failed to comply with the order.
However, on Thursday, the Indian government presented a bill in the Lok Sabha lower house of parliament, to withdraw all retrospective tax demands on Cairn and said it will refund the funds collected to enforce such levies.
"We have noted the introduction to the Indian parliament of the Taxation Laws (Amendment) Bill 2021, which proposes certain amendments to the retrospective taxation measures that were introduced by the Finance Act 2012. We are monitoring the situation and will provide a further update in due course," Cairn said in response on Thursday.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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