Shares of Edinburgh-based international oil and gas company Cairn Energy soared about 26% on Thursday amid news that India has proposed scrapping a controversial law that taxed companies retrospectively and said it will refund disputed amounts.
That move that could potentially help settle its multi-billion-dollar tax cases with Cairn Energy and Vodafone.
Cairn was awarded damages of more than $1.2 billion last year at a tribunal at The Hague after a long battle with India over certain tax claims.
Reuters reported that the amendment to the tax law could resolve at least 17 disputes of tax payments amounting to $6.7 billion or more.
Taxes on the indirect transfer of Indian assets before May 2012 will be nullified if companies withdraw litigation and give an undertaking that they will no longer claim damages, a government proposal presented to parliament said.
“We have noted the introduction to the Indian parliament of the Taxation Laws (Amendment) Bill 2021, which proposes certain amendments to the retrospective taxation measures that were introduced by the Finance Act 2012,” said Cairn.
“We are monitoring the situation and will provide a further update in due course.”
Tarun Bajaj, revenue secretary at India’s finance ministry, told Reuters that the current government had proposed scrapping the law as it doesn’t believe in retrospective taxation.
“Now it depends on companies to come forward,” and settle, he said.