An international arbitration tribunal awarded $1.2 billion in damages plus interest and costs to British oil explorer Cairn Energy Plc in a tax dispute with the Indian government, dealing a blow to New Delhi’s efforts to tackle aggressive tax avoidance by foreign companies. Cairn approached the tribunal after India’s 2015 tax demand of $2.74 billion over the group’s reorganization in 2006, resulting in the creation of Cairn India Ltd. The tribunal has a member each from Cairn and the Indian government as well as a neutral arbitrator. The ruling marks India’s second major setback in three months at international tribunals over invoking a controversial 2012 law that allows the government to claim taxes with retrospective effect. In September, an arbitration court favoured Vodafone Group Plc. The amendments to the tax law in 2012 gave Indian officials power to demand taxes for deals struck before the law was approved in Parliament if the underlying assets in a transaction between two foreign entities were in India.
Courtesyg: Google (photo)
