Nokia in Court over Indian Tax Dispute
Published on: 14th Mar 2014
By: Ian Mansfield
India's Supreme Court has ordered an independent valuation of Nokia's Indian assets be carried out as part of a tax dispute that Nokia is fighting in the country.
The tax collection office, the IT Department claims that Nokia's sale of its handset business, including a major handset factory in the country without also including its tax liabilities could mean that it is unable to recover the lost taxes -- should the courts agree that the taxes are indeed due.
Nokia contests all aspects of the demand, which relates to how software developed in Finland is transfered to India for use in locally produced mobile phones. The Indian tax authorities claim that Nokia avoided paying tax on the internal sales, while Nokia claims a double-taxation avoidance treaty with Finland means they shouldn't be taxed on the sale in both countries.
However, Nokia's largest asset in the country, its huge handset factory has been seized by the tax authorities to prevent its sale to Microsoft, although both companies have said that the issue wont delay the overall plans to sell the handset division.
Nokia's lawyer argues that the value of the asset would decline if it cannot be included in the Microsoft deal, and now the Supreme Court has asked for independent valuations of the asset to be carried out.
The IT Department wants Nokia to be asked to furnish/deposit security for the remaining unpaid tax amount.
The tax dispute is for USD635 million.