After India abolishes the tax law, it provides 1 billion U.S. dollars in refunds to Kane Energy

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India Economic Update

India hopes to return US$1 billion to UK-based Kane Energy Hard fight With well-known foreign investors.

Approved by the House of Commons on Friday Draft law It was launched the day before and cancelled the 2012 policy that allowed New Delhi to impose retroactive taxation on some foreign investments. The House of Lords is expected to approve the law as early as next week.

New Delhi will also abandon its outstanding US$13.5 billion claims against multinational companies such as telecommunications group Vodafone, pharmaceutical company Sanofi, and brewer SABMiller, which is now owned by AB InBev, as part of restoring its business. Damaged reputation As an investment destination.

Analysts said that this legal move will enable New Delhi to resolve the increasingly fierce international tax struggle with Keynes. embarrassment For India. In recent months, the British energy group has been seeking to seize part of the government’s estimated value of US$70 billion in overseas assets.

“it is Settlement offer Disguised as the law,” said a foreign business analyst who requested anonymity.

The government of Prime Minister Narendra Modi hopes that the settlement of the dispute will enhance its reputation among foreign companies as it seeks New investment In order to revive India’s economy hit by the new crown virus.

“We want to send a message to investors that the country believes in the stability and certainty of taxation,” Tax Minister Tarun Bajaj told reporters on Friday. “Taxation is a sovereign right and cannot be deprived of it. But we should use it cautiously and prudently.”

Bajaj stated that if these companies agree to abandon pending litigation, including claims for interest and fines, approximately $1.2 billion collected from the company under the tax terms that are about to be cancelled will be refunded.

He added that approximately US$1 billion of this will go to Kane and US$270 million will go to other groups including Vodafone.

The income minister also stated that India will abandon about 12 tax cases that have not yet been collected, and the value of these cases—along with interest and fines—is $13.5 billion.

“All the requests that have been made will be cancelled,” Bajaji said. But to settle, the affected company will “only agree to accept the principal, not interest or anything else.”

International Arbitration Panel in December order New Delhi will pay Kane US$1.2 billion, plus interest and costs, for the seizure and sale of 10% of Kane’s former Indian business in 2014.

New Delhi’s refusal to comply with the arbitration award prompted Kane to seek to seize Indian government assets abroad, including aircraft Air India, And the diplomatic apartment in Paris.

Cairn estimated Arbitration award At $1.7 billion, it said on Thursday that it has “noted” the proposed legislation and is “monitoring the situation.” The company declined to comment on the proposed $1 billion refund.

Meyyappan Nagappan, a tax lawyer who has worked with the Indian government, said: “I don’t know if this transaction is enough for the company to continue the settlement.”

Speaking of the affected companies, he added: “I didn’t get damages, I didn’t get legal fees, I didn’t even get tax interest, and every company that owes taxes will get these interest.”

He continued: “If Kane gets a ruling in its favor, and they are confident that they will win the appeal and be able to enforce it, and they threaten to do so, then they can get more benefits than the deal offered.”

After rising 27% on Thursday, Kane shares rose 7% on Friday.

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