Nokia Describes Latest Indian Tax Demand As Absurd
Published on: 22nd Mar 2014
By: Ian Mansfield
Nokia has described the latest twist in its Indian tax dispute as "absurd" and filed a writ with the Madras High Court to contest a claim from the Tamil Nadu tax department.
The latest development sees the Tamil Nadu tax department seeking to assess sales tax on the export of devices from the company's Chennai facility.
Chennai is the capital city of Tamil Nadu state.
Nokia considers the claim to be completely without merit and counter to domestic tax laws. In India, exports are by law exempt from tax, and Nokia has proved consistently that devices produced at Chennai are exported abroad.
In a statement, Nokia said that it is "absurd that the Tamil Nadu tax authority is now claiming that devices made in Chennai were not exported and were instead sold domestically in India. We contend that this allegation has no basis in reality whatsoever; it could easily be rebuffed by a check of documentation provided to various governmental departments including Customs."
The tax demand is reported to be for around USD390 million, and is on top of the existing, contested USD635 million tax dispute over software imports.
Nokia denies that the tax on software transfers is payable, as there is a dual-taxation avoidance treaty with Finland to prevent the software being taxed in both countries.
The tax dispute has the potential to reach as high as USD3.4 billion when all the possible penalties and interest payments are included.