Cairn Energy Says India Raised Its Tax Bill

By Rajesh Roy 

NEW DELHI--Cairn Energy PLC says Indian tax authorities have rebilled it for $4.4 billion in back taxes and interest despite New Delhi's pledge to make the country's tax system more predictable.

In its financial results for last year released Tuesday, Cairn U.K. Holdings Ltd. said it received a new tax demand from Indian authorities in recent months that increased its declared liability by more than $1 billion.

In his budget speech last month, Indian Finance Minister Arun Jaitely reiterated the government's intention of providing a stable and predictable tax regime. He offered a one-time waiver of interest and penalties if companies settled their outstanding disputes.

A year ago, the tax authorities said Cairn India failed to pay withholding taxes on gains made by its former parent Cairn Energy in a share transfer. Cairn Energy said it doesn't owe the money because it transferred shares internally as part of a group restructuring to prepare for the public listing of Cairn India's shares in 2007.

"We have commenced international arbitration proceedings under the U.K. India Bilateral Investment Treaty to settle the dispute," said David Nisbet, director of corporate affairs at Cairn Energy PLC, in an email Tuesday.

The latest tax demand includes $1.6 billion in principal and $2.8 billion in interest, according to Cairn Energy.

An Indian finance ministry spokesman declined to comment.

Write to Rajesh Roy at [e-mail]

(END) Dow Jones Newswires

March 15, 2016 11:48 ET (15:48 GMT)

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