Tax Strategy

The Cairn Energy PLC Group Tax Strategy


In accordance with Finance Act 2016, this tax strategy applies to Cairn Energy PLC and its subsidiaries for the year ended 31 December 2018. There has been no substantive change to the tax strategy from the previous year.

Overall the board is ultimately accountable for tax risk within the group; identification of tax risk is the responsibility of the Group Tax Manager.

Tax Strategy

The Cairn Energy PLC group seeks to deliver value for shareholders from the discovery and development of hydrocarbons within a sustainable self-funding business model: maintaining a balanced portfolio, seeking operation excellence and delivering a sustainable business.

In its approach to tax, the group aims to be a good corporate citizen, managing its tax affairs in a transparent and responsible manner in all the jurisdictions in which it operates. Cairn is committed to having open and constructive relationships with all tax authorities.

The group’s activities have been focussed on assets at exploration, appraisal and development stages; from 2017, production income has been received for the first time for several years. Due to the level of costs incurred in developing the fields which generated income from 2017, it is unlikely that any taxable profits will be realised.  However the group does pay employer taxes, stamp and import duties and other taxes including sales taxes as well as collecting and remitting employee taxes and withholding taxes thereby contributing significantly to the economy of the countries in which it operates.

In its approach to tax, the group relies on the following key principles:

  • Risk Management and Governance
    • Corporate responsibility is key to Cairn and its business principles are based on these core values:
      • Respect: Cairn acts with respect for people, their communities, the environment, human rights and the law;
      • Responsibility: Cairn behaves fairly and ethically and is accountable for its actions. The group believes in, and acts on, its responsibility to care for people, society and the environment
      • Relationships: Cairn acts honestly, transparently and with integrity to develop strong, lasting relationships with all our stakeholders
    • As part of the group’s internal control framework, it follows the Cairn Risk Management Process. Tax risks are included in that process. We identify, assess and manage tax risk and report these to the Group Risk Management Committee (RMC) which meets regularly throughout the year.  The RMC reports to the Audit Committee of the Board and the main board undertakes a risk workshop annually which considers attitude to and management of risk across the group.
    • The group aims for certainty in relation to the tax treatments of all items but acknowledges that this will not always be possible for instance where transactions are complex or the jurisdiction in which the Group operates has a tax regime which is new or untested
    • Tax law can be open to interpretation and where uncertainty exists the group will form an internal view and take written advice from external advisors on any ambiguous area.
  • Tax Planning
    • Cairn undertakes tax planning that supports our business and reflects commercial and economic activity. The group’s policy is not to enter into any artificial tax avoidance schemes. 
    • Cairn will base its views on the relevant tax laws in force at the time and seeks to minimise disputes
    • Where governments in the jurisdictions in which Cairn operates offer incentives or exemptions to encourage investment, Cairn seeks to apply these in the manner intended as part of the overall investment arrangements
  • Relationships with Tax Authorities
    • The group seeks to build and maintain strong collaborative working relationships with all relevant tax authorities
    • Cairn engages with governments and tax authorities in the development of tax law and guidance both directly and through industry bodies
    • Cairn will not consider any arrangement which relies on less than full disclosure to HMRC or other tax authorities 

Further informatioan


This policy will be reviewed and updated annually or as appropriate. It was last approved on 28 November 2018. 


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