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Nokia's Indian Tax Row Escalates

by Mary Swire, Tax-News.com, Hong Kong

07 January 2014

The Indian Income Tax Department has sought "directions/clarifications" regarding the Delhi High Court's decision to unfreeze assets seized from Nokia.

The assets were frozen late last year, in an effort to claw back taxes the Department claims Nokia owes. The mobile phone manufacturer was asked to pay a INR20.8bn (USD334.3m) bill for royalty taxes relating to the period between 2006-07 and 2011-12.

Nokia appealed to the New Delhi High Court to unfreeze the assets in time for Microsoft's December 12 takeover deadline. It proposed that the entire proceeds of the sale of its Chennai factory to Microsoft – estimated at INR22.5bn – would be handed over to the taxman. The Court agreed to Nokia's suggestion, albeit on the condition that the full amount be deposited in an escrow account as a security. The firm's parent company, Nokia Corporation, is required to pay up to INR35bn in taxes.

The Department has now written to the Court, requesting that "for the sake of clarity," directions need to be issued for placing the INR22.5bn in an escrow account "preferably in India." The Department is also seeking "directions/clarification for payment of the said amount of INR35bn as and when the demand is raised and is due for payment."

TAGS: compliance | tax | tax compliance | India | tax avoidance | law | tax authority | tax planning | revenue statistics | Tax | Tax Evasion

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