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India Freezes Nokia's Assets In Tax Dispute

by Mary Swire,, Hong Kong

02 October 2013

The Indian tax authorities last week froze assets owned by Finnish mobile phone manufacturer Nokia, just days after it is thought that the company asked for help in settling a tax dispute.

The Government claims that Nokia is liable for a INR208bn (USD3.3bn) bill in back taxes, relating to the period between 2006-07 and 2011-12. It considers that payments made for software used in devices produced in India, and supplied by Nokia's parent company, are classifiable as royalties, and therefore subject to a 10 percent tax. In June, Nokia warned that the dispute had made it consider withdrawing from India, as had the Tamil Nadu government's failure to refund value-added tax (VAT) paid by the company.

Nokia's executive vice president Stephen Elop met with the Indian Trade Minister Anand Sharma on September 10, when it is thought that he asked for help in resolving the issue. Sharma is believed to have advised that Elop approach the Finance Ministry instead.

In the latest development, Nokia says that the authorities froze all of its Indian assets and bank accounts on September 25. According to a statement, Nokia immediately appealed to the Delhi High Court, which ruled in favor of the company the following day. Its bank accounts were duly unfrozen.

A spokesperson went on to stress that "Nokia has sufficient assets in India to meet its tax obligations, details of which will be shared with the tax authorities to allay any concerns they may have."

TAGS: compliance | Finance | tax | business | tax compliance | India | tax avoidance | royalties | revenue guidance | tax authority | multinationals | tax planning | tax rates | revenue statistics | tax reform | telecoms | Tax | Tax Evasion

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