Cairn used ‘abusive structure’ to ‘not pay tax anywhere on India profits’

Our Bureau New Delhi | Updated on March 11, 2021

Cairn set up a “tax-abusive structure” and did not pay taxes anywhere in the world on the gains that it made in India, official sources alleged on Wednesday.

This remark comes three days after the Chief Executive Officer of Scotland-based energy major, Simon Thomson, tweeted: “Our shareholders are watching. They expect India to honour its obligations and to quickly bring this matter to a conclusion and if India do not do that, and if India delay, then our shareholders expect us to pursue our strong powers of enforcement which we have to do.”

Cairn won an arbitration award in December that asked India to pay $1.2 billion plus interest and costs.

On Wednesday, sources in the know said that Cairn is talking to the Government (of India) but yet to respond to the government post the discussions. Last month, Thomson met the Finance Secretary and senior Tax Department officials for two days.

Sources also said that India is in the process of filing an appeal in the case. “It was well within India’s sovereign powers to redress the situation of Double Non-Taxation and tax abuse,” one of the sources said while adding that if enforcement proceedings are initiated, India is confident of addressing them and will strongly defend its interests. However, “India is open for a constructive settlement of tax disputes within the existing legal framework,” he said.

Last week, Finance Minister Nirmala Sitharaman had said it was her “duty to appeal in cases where the nation’s sovereign authority to tax is questioned”.

Cairn has already moved courts in the US, the UK, the Netherlands, Canada, France, Singapore, Japan, the UAE and Cayman Islands to get the December 21 international arbitration tribunal award registered and recognised. This is the first step before it can seek seizure of the Indian government assets such as bank accounts, payments to state-owned entities, aircraft and ships in those jurisdictions in case India does not return the value of the shares seized and sold, dividend confiscated and tax refund stopped to adjust a ₹10,247-crore tax demand raised using a retrospective legislation.

Published on March 10, 2021

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