3rd Apr 2014 10:33
LONDON (Alliance News) - Cairn Energy PLC said Thursday that it will take "whatever steps are necessary" to defend itself over its ongoing tax dispute in India, and reiterated that it had been compliant with tax legislation in every year of its operations in India.
Cairn Energy has been contacted by Indian tax authorities to discuss its income tax assessments for its financial year to end-March 2007, and whilst these discussions are taking place, has been instructed to hold its shares in Cairn India Ltd.
The tax authorities were requesting information regarding transactions undertaken by its subsidiary Cairn UK Holdings Ltd which filed a nil return for 2007 as none of the transactions undertaken by it during that year were chargeable to tax in India.
Cairn Energy said it had received two further notices from the tax department; the first requesting for Cairn Energy to file a tax return for the year in question. It intends to file a nil return for this notice.
The second claims the subsidiary should have withheld tax on dividends paid to Cairn Energy, which Cairn intends to refute.
In March the company warned that its outlook partly depends on the timing of the resolution of the tax dispute. It swung to a loss in 2013 as it posted a big impairment for the Catcher fields in the North Sea as resource estimates were downgraded and cost assumptions rise, as well as goodwill impairments for previous acquisitions.
Cairn said in January that the tax claim was retrospective, and the result of a law brought in after the year affected by the claim.
India has stepped up efforts to collect back taxes from major international companies as it tries to bring down its budget deficit. Companies including Vodafone Group PLC, Royal Dutch Shell PLC and IBM of the US are already embroiled in tax disputes in the country.
Shares in Cairn were trading up 0.7% at 168.10 pence Thursday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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