MUMBAI (AFP) – India has refunded USD1.1 billion to Scottish energy firm Capricorn, the company said, settling an embarrassing years-long tax dispute that damaged the Asian country’s reputation as a place to invest.
A 2012 tax law gave New Delhi the power to claim back taxes from enterprises that had acquired assets of local companies in past deals.
It was dubbed “tax terrorism” by the then-opposition BJP – which is now in power – and repealed last year after a series of disputes with multinationals including Vodafone.
Capricorn – formerly known as Cairn Energy – successfully challenged the claims through international arbitration tribunals, but India refused to accept the rulings.
Capricorn then moved to seize properties owned by India in Paris and New York last year to get back the money the tribunal ruled was owed by the government.
After New Delhi repealed the law in August 2021, the company said it would drop its lawsuits and claims in exchange for a refund.
“Capricorn is pleased to confirm that the expected Indian tax refund of INR79 billion has now been paid and net proceeds of USD1.06 billion have been received,” the company said in a statement on Thursday.
The refund makes up the lion’s share of INR81 billion India has earmarked to settle similar tax disputes with 17 companies.
The dispute with Capricorn dates back to an internal transfer of shares between Cairn Energy and its India subsidiary in 2006.
The company later sold its local unit to billionaire Anil Agarwal’s Vedanta Resources.