India offers Cairn Energy $ 1 billion rebate after retroactive tax removal: report
India expects to pay back $ 1 billion to UK-based Cairn Energy after deciding to scrap a retrospective tax law that sparked fierce battles with major foreign investors, the Financial Times reported.
The lower house of parliament on Friday approved a bill introduced the day before, overturning a 2012 policy that allowed New Delhi to retrospectively tax certain foreign investments. The upper house is expected to approve the law as early as next week.
New Delhi would also drop $ 13.5 billion in unpaid claims against multinationals such as telecoms group Vodafone, pharmaceutical company Sanofi and brewer SABMiller, now owned by AB InBev, as part of efforts to repair its damaged reputation. as an investment destination, according to the report.
Analysts say the legal move would allow New Delhi to resolve a bitter international tax battle with Cairn that has become increasingly embarrassing for India. The British energy group has sought in recent months to seize part of the foreign assets estimated at 70 billion dollars by the government.
“This is a settlement offer disguised as law,” said a foreign business analyst, who requested anonymity. The government of Prime Minister Narendra Modi hopes that the resolution of the dispute can strengthen its reputation with foreign companies as it seeks new investments to revive the Indian economy affected by the Covid.
“We want to convey to investors that the country believes in fiscal stability and security,” Revenue Secretary Tarun Bajaj told reporters on Friday. “Taxation is a sovereign right and cannot be taken away. But we must use it sparingly, judiciously.”
Bajaj said about $ 1.2 billion collected from companies under the soon-to-be-phased tax provision would be refunded if companies agreed to drop pending litigation, including claims for interest and penalties. . About $ 1 billion would go to Cairn and $ 270 million to other groups, including Vodafone, he added, according to the report.
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