LONDON Jan 24 British explorer Cairn Energy
said it had been contacted by India's tax authorities to
discuss income tax assessments dating back about seven years,
becoming the latest foreign firm to be embroiled in India's tax
India has stepped up its efforts to enforce tax collection
to remedy its budget deficit. Other companies recently involved
in tax disputes in India include Vodafone, IBM,
Royal Dutch Shell and LG Electronics.
Cairn said the assessments were for the year ended Mar. 31,
2007, and it was cooperating to provide the necessary
information and would update the market in due course.
It said while talks were ongoing, it had been instructed by
the income tax department to keep hold of its shares in Cairn
India. Cairn Energy holds a 10.3 percent stake in
Cairn India, which is now majority owned by mining conglomerate
Shares in Cairn Energy opened 3.9 percent lower but
recovered to trade down 2.5 percent at 255.5 pence by 0813 GMT.
In 2006, Cairn Energy spun off its Indian oil and gas
operations into Cairn India and listed the unit a year later, in
a flotation that raised $1.18 billion, making it at the time the
largest initial public offering in Indian corporate history.
(Reporting by Brenda Goh; Editing by James Davey and David