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Nokia must clear Rs 6,500 cr tax liability: FinMin

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Finance Ministry official said that Nokia, which is being acquired by Microsoft, will have to clear a total tax liability estimated at around Rs 6,500 crore. (Reuters) Finance Ministry official said that Nokia, which is being acquired by Microsoft, will have to clear a total tax liability estimated at around Rs 6,500 crore. (Reuters)
SummaryIndian taxman cracks the whip says, 'Nokia will have to pay total tax liability'.

Unfazed by threats of closure of Nokia's Chennai plant, a top Finance Ministry official today asserted that the Finnish company, which is being acquired by Microsoft, will have to clear a total tax liability estimated at around Rs 6,500 crore.

"Nokia will have to pay total tax liability," the senior official said when asked to respond to the recent statement of Finland's Foreign Minister Erkki Tuomioja.

Tuomioja had told a group of visiting Indian journalists last week that failure to resolve Nokia tax case before December 12 could lead to closing down of the Chennai plant which directly and indirectly employs 30,000 people in India.

"There is an agreement between Nokia and Microsoft that unless this dispute is solved and the assets of its Chennai plant unfreezed before December 12, the Chennai plant would be left outside of Nokia-Microsoft agreement."

"That of course, in the worst case, could lead to closing down of the Chennai plant, which is employing many thousand people, and with sub contractors up to 30,000 people. So, I think that would not be (in) anyone's interest," he had said.

The Income Tax Department had slapped a notice on Nokia's Indian subsidiary for violating withholding tax norms since 2006 while making royalty payments to its parent company in Finland.

Nokia had moved the Delhi High Court seeking lifting of stay on transfer of its assets here and offered to pay a minimum deposit of Rs 2,250 crore as tax, contending that the injunction will jeopardise the sale of its Indian arm to US- based tech giant Microsoft under the global deal.

The I-T Department this week told the Delhi High Court that the offer of Nokia to pay a minimum deposit of Rs 2,250 crore to it, out of the company's total tax liability of nearly Rs 6,500 crore, is not acceptable.

Nokia India, however, had stuck to its offer and said it is for the department to decide if they are better off with the proposed amount or without it.

The matter has been listed for December 9 when Nokia has to give details of its assets and liabilities as well as how much tax it has paid here.

Nokia's Chennai plant is one of its biggest facilities. It may be excluded from the USD 7.2 billion agreement between Nokia and Microsoft if the company's assets are not released by December 12.

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