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Government relations

Payments to governments

Cairn supports transparency around how revenues from the natural resources extractive industry are used and the transparency of tax contributions and other payments to governments by oil and gas companies. Cairn reports payments to governments annually, which are published in its annual reports. This is in compliance with European Union (EU) legislation and as part of its voluntary commitment to the Extractive Industries Transparency Initiative (EITI), which it joined in September 2013. The EITI requires companies to publish what they pay to governments, and for governments to publish what they receive from companies. Under EITI regulations, payments are then validated and reconciled by an independent administrator appointed by a multi-stakeholder group. Norway, Senegal and the UK have all joined the EITI. No other countries in which Cairn operates have joined. We are actively participating in EITI working groups in Senegal.

As a listed company operating within the EU, the EU Accounting Directive applies to Cairn and requires companies to disclose certain payments to governments on a country-by-country basis.

As Cairn operates in various territories with diverse tax obligations and requirements, we are committed to ensuring that in every territory we comply fully with local tax rules and regulations. Cairn’s Tax Policy does not permit any artificial tax planning and, in managing its tax affairs, the Group must align any planning with genuine commercial activity.

Payments required to be disclosed under the EU Accounting Directive are aligned to those required to be disclosed under UK EITI and comprise the following:

  • production entitlements;
  • taxes levied on income, production or profits (excluding VAT, personal income tax or sales tax);
  • royalties;
  • dividends; and
  • signature, discovery and production bonuses.

As at 31 December 2015, Cairn’s remaining holding in Cairn India Limited (CIL) was approximately 10%. The retroactive tax claim made by the Indian Tax Department is addressed in the Financial Review of the 2015 Annual Report.

As in previous years, we have disclosed our payments to governments. These disclosures include both payments to governments included in our EITI reporting, such as corporate income tax, licence fees and withholding tax suffered, and additional payments made including VAT, payroll taxes and social security costs.

Our EITI submission has been made to Companies House, a copy of which is available in the Report on Payments to Governments [PDF (0.40Mb].

KPIs

  • Payments to government

Participation in public policy development and lobbying

The governments of the countries where we operate are key stakeholders due to the significance to our business of legislation, regulation and the awarding of new licences. Each asset within the business is responsible for engaging with our host governments and this is considered within each asset’s Public Consultation and Disclosure Plan (see Prioritising key issues – Stakeholder engagement processes) and carried out in accordance with our core values and Business Principles. Cairn does not engage in party politics or make donations to political parties, candidates or lobbyists.

Cairn’s participation in public policy development and lobbying is usually carried out through relevant industry bodies such as the International Association of Oil & Gas Producers (IOGP) or regional industry groups such as Oil & Gas UK, the Association of British Independent Oil Exploration Companies (BRINDEX), Irish Offshore Operators’ Association (IOOA) and the Norwegian Oil and Gas Association (OLF).

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