NEW DELHI: India’s government sought to scrap a rule mandating overseas companies to pay back taxes on local assets they bought or sold indirectly, in a move aimed at ending spats with multinational companies, including Vodafone Plc and Cairn Energy Plc.

       The bill to amend the tax law was introduced in the lower house of Parliament, according to the Finance Ministry spokesperson.

       Companies will be eligible to seek exemption from the tax only after dropping pending litigation and forgo cost of damages or interest, according to the bill tabled in parliament.The move comes after Cairn was allowed by a French court to seize Indian state-owned properties in Paris, part of the company’s attempt to recover a US$1.2bil (RM5.1bil) arbitration award it won last year.

       New Delhi was also battling litigation from Vodafone, which had challenged a 200 billion-rupee (US$2.7bil or RM11.4bil) claim in past taxes.Cairn said Thursday it’s “monitoring the situation,” while shares of the oil producer had jumped by as much as 47% at 3:30 pm in London, the most since 2004.

       The UK oil explorer received the tax claim from Indian authorities in March 2015 over a restructuring carried out in 2006 while preparing for an initial public offering of Cairn India. Last year, an international arbitration ordered India to return US$1.2bil (RM5.1bil) plus interest to the company.

       After that, Cairn initiated proceedings in numerous other locations globally seeking recognition and enforcement of the ruling, including taking the state-owned carrier Air India Ltd to a US court in May.With Vodafone, the government was trying to levy capital gains tax from the company for its 2007 acquisition of the then Hutchison Whampoa Ltd’s Indian operations, a move that spooked global investors. An international arbitration tribunal also ruled last year that India’s move was a breach of fair treatment under the bilateral investment protection pact between the south Asian nation and the Netherlands.

       The years-long disputes tarnished India’s image as a business friendly destination, marring Prime Minister Narendra Modi’s efforts to win investments to spur a slowing economy, which is now further weakened by the coronavirus pandemic.

       “The country today stands at a juncture when quick recovery of the economy after the Covid-19 pandemic is the need of the hour and foreign investment has an important role to play in promoting faster economic growth and employment,” according to the bill. — Bloomberg