Finnish mobile major Nokia?s domestic arm has secured an interim stay order from the Delhi High Court on a R2,080-crore tax demand from Indian authorities issued earlier this month. The mobile phone giant on Thursday confirmed the receipt of the tax demand and stated it ?is in full compliance with local laws as well as the bilaterally negotiated tax treaty between the governments of India and Finland, and will defend itself vigorously?. The company also promised to cooperate with Indian authorities and hoped for a prompt resolution to the dispute.
?In this regard, Nokia filed a writ before the Delhi High Court last week, and on Friday, March 22, the court has issued notice to the income tax department to file its counter-affidavit and has granted interim stay of the entire tax demand raised against Nokia till further orders,? Nokia said.
The tax demand pertains to its operations for five years from 2006-07. The authorities are making their best efforts before the close of the 2012-13 financial year on March 31 to meet the net tax collection target, which officials said has touched only 77% of the estimated R7.4 lakh crore at the end of February. Asia?s third-largest economy, which is trying to shore up revenue and avoid a credit ratings downgrade, is perceived to be one the toughest in cross-border tax matters.
Recently, the government issued tax demands to multinationals like Vodafone and Shell for alleged transfer pricing violations, which the companies have contested as bad in law.
?Nokia remains willing to cooperate fully with Indian tax authorities in accordance with all applicable laws. Nokia has enjoyed a long and fruitful relationship with India, and looks forward to a prompt and just resolution to this matter,?the company stated.
The company also said it has been scrutinised by the authorities regularly since it started business operations in India in the mid-1990s, and that its policies have been validated by the Indian and Finnish tax authorities in the normal course of tax proceedings. The company has invested over $330 million in Chennai since setting up a factory there.
The tax demand was issued to Nokia in mid-March and the Finnish company received the order last week, the court document said. The tax department has one week?s time to file its counter-affidavit. As per the court documents, Nokia India assured the court that it would not transfer or remit any funds outside India, except in the normal course of business, until the date of the next court hearing. It also told the court it had no intention to evade any taxes in India, but would seek legal recourse to challenge the notice of tax demand.
Company claims full compliance with laws and says it will defend itself ?vigorously?.