Capricorn (Cairn) Energy has announced that it has entered into the final stage of its undertaking with the Government of India to resolve a dispute regarding a retrospective capital gains tax assessment issued by the India tax authorities in 2016 for an indirect transfer of shares in 2006. This will include a tax refund of approximately INR 79 billion (~USD 1.06 billion). Note, Cairn Energy changed its name to Capricorn Energy in December 2021.

As previously reported, the 2006 transfer was not taxable at the time but considering changes in the taxation of indirect transfers introduced by the Finance Act 2012, the retrospective assessment was issued. The assessment has since gone through several appeals in India and at the international level, with a decision issued by the Tribunal of the Permanent Court of Arbitration in December 2020, which found that Cairn could not be subject to such a retrospective assessment. While the Indian government long sought to make such retrospective assessments, amendments were introduced in August 2021 that effectively nullified retrospective taxation of indirect transfers made before 28 May 2012, which is the date Finance Act 2012 was assented (enacted).

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India Update

Capricorn Energy PLC announces that it, together with its subsidiary CUHL (the 'Company'), has entered into the final stage in its undertakings with the Government of India by withdrawing all global enforcement proceedings. This concludes all the necessary steps required of the Company under the rules of the India Taxation (Amendment Act) 2021.

Upon its acceptance of the Company's submission that all of those requirements have been satisfied, the Government of India will pay the Company a tax refund of approximately INR 79bn (US$1.06bn).

Capricorn is working collaboratively with the Government of India towards expediting the refund within the process of the Tax Amendment Act Rules. The previously announced special dividend is expected to be paid in early 2022.