Finland's foreign trade minister Alexander Stubb on Tuesday took up with India's commerce and industry minister Anand Sharma the tax dispute that the Finnish mobile handset maker Nokia has run into with officials here.
The visiting minister said he hoped for a “positive resolution” to the issue. The Income-Tax department has demanded tax on Nokia's software purchases from its overseas parent, treating it as payment of royalty, on which tax ought to be deducted at source.
“We, of course, discussed some company issues, including Nokia. It is probably not for me or the minister to decide on those issues that are being dealt with in normal rule of law, arbitration in the Indian courts and, on the top of that, we have tax authorities dealing with them.
But it was very good to get the arguments on both sides. And I am quite confident that the issue will be resolved positively,” Stubb said after meeting Sharma.
Last month, Microsoft bought Finnish mobile maker Nokia even as the phone maker had told the ministry that India has become the "least favourable market" and it made business sense to exit and export from China. Besides, it had urged the India government to "act quickly to correct the wrong perception of India as a place for business".
The company is also embroiled in a controversy due to non-refund of VAT by the Tamil Nadu government to its production facility in Chennai, which was setup in 2006.
As per an MoU, the government was to refund 4% VAT Nokia pays on the phones sold in the domestic market from its plant in the Special Economic Zone (SEZ).
The factory employs more than 38,000 people and has produced 800 million phones.
In 2012-13, India's exports to Finland stood at $317.27 million while the imports were $1,106.85 million.