Capricorn Energy, in a statement today, has said that the company has concluded all necessary steps under the rules of the India Taxation (Amendment) Act 2021 required for payment by the Government of India of a tax refund of approximately Rs 7,900 crore ($1.06 billion). The payment is expected to be made in early 2022. Its CEO, Simon Thomson, said, “With balance sheet strength and financial flexibility, Capricorn enters 2022 positioned to make another significant capital return to shareholders with the company having concluded all required steps to enable payment of the India tax refund.”

Proceeds to shareholders

Capricorn plans to return up to $700 million (around ₹5,200 crore) of the India tax refund proceeds to shareholders. Of this $500 million is planned to be returned by way of a tender offer, whereby shareholders will be invited to tender some or all of their shareholding for purchase. The remaining sum of up to $200m will be returned by way of an ongoing share repurchase programme. As part of an agreement with the Indian government last year in November, Capricorn announced that it will participate in the new scheme — Taxation Laws (Amendment) Bill 2021 — which allows the company to get a tax refund. The amendment nullifies the tax assessment originally levied against it in January 2016 and orders the refund of the amount that was collected from Cairn.  Subsequently on January 6, 2022, the upstream energy firm said it has entered into the final stage in its undertakings with the Indian government by withdrawing all global enforcement proceedings. This concludes all the necessary steps required of the Company under the rules of the India Taxation (Amendment Act) 2021. Upon its acceptance of the company’s submission that all requirements have been satisfied, the Government of India will pay the firm a tax refund of around ₹7,900 crore. After failing to resolve the issue of retrospective tax in Indian courts, Cairn Energy filed a dispute under the UK-India investment treaty and went for international arbitration in 2015. The company also pursued its case at the Permanent Court of Arbitration at The Hague, which awarded it a $1.2 billion arbitration award in December 2020. It had also registered the claim in several countries, including Canada, France, Netherlands and the US.

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