Capricorn Energy - formerly Cairn Energy - has entered into the final stage in its undertakings with the Government of India, by withdrawing all global enforcement proceedings.
This concludes all the necessary steps required under the rules of the India Taxation (Amendment Act) 2021, and upon its acceptance of the company’s submission that all of those requirements have been satisfied, the Indian Government will pay a tax refund of approximately $1.06bn.
A statement from Capricorn explained that it is working collaboratively towards expediting the refund within the process of the Tax Amendment Act Rules.
A previously-announced special dividend is expected to be paid in early 2022.
As recently as last March, the Indian Government had appealed a ruling by an international tribunal ordering it to pay damages to the Edinburgh-based oil and gas exploration company, in a long-running tax dispute.
A previous ruling ordered the Indian government to compensate the company for breaching its obligations under the UK-India Bilateral Investment Treaty.
Capricorn took the case to arbitration in 2015, challenging a demand in 2014 from Indian authorities for $1.4bn in taxes it said were owed on capital gains related to the 2007 listing of its local unit.
In 2011, the company sold its majority stake in Cairn India to Indian mining company Vedanta, reducing its stake in the Indian company to about 10%.
The government seized the remaining shares in 2014, after the tax complaint was made, as well as dividends Vedanta owed Capricorn for its holdings in the Indian firm.
The dispute originally centred on restructuring undertaken by Capricorn ahead of the flotation of its Indian subsidiary in 2007.
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