The Financial Times reported on 1 October that India’s tax authorities have frozen Nokia’s assets in the country following a $321m (or approximately 20bn rupees) dispute ‘relating to income tax payments for mobile phone software licences, provided to [Nokia’s] Indian subsidiary by its pa
The Financial Times reported on 1 October that India’s tax authorities have frozen Nokia’s assets in the country following a $321m (or approximately 20bn rupees) dispute ‘relating to income tax payments for mobile phone software licences, provided to [Nokia’s] Indian subsidiary by its parent company in Finland’, following a raid by tax inspectors at the company’s Chennai offices in January. Nokia said the demands were ‘excessive, unacceptable and inconsistent’, while the FT reported that a person close to the case believed it was likely related to Nokia’s recently-announced deal to sell its phone unit to Microsoft. Nokia launched an appeal to a court in New Delhi last week, a move which unfroze its bank accounts but left its fixed assets – including its manufacturing facility in Chennai – still affected. A spokesperson for Nokia told the paper: ‘We are in a dialogue with the government, and we have more than enough assets to settle our liabilities relating to this issue ... So we expect our deal [with Microsoft] to be completed on schedule by the first quarter of 2014.’
Dinesh Kanabar, head of tax policy at KPMG India, said: ‘For the authorities to seize assets for non-payment of tax in this way is not usual at all. It only happens if they think that someone is not likely to make these payments. The tax authorities do have some powers to object to any merger, so that can put pressure on the parties involved, and so it seems this is a move to give the tax authorities a chance to squeeze them [Nokia] for the money they believe is due.’
The Financial Times reported on 1 October that India’s tax authorities have frozen Nokia’s assets in the country following a $321m (or approximately 20bn rupees) dispute ‘relating to income tax payments for mobile phone software licences, provided to [Nokia’s] Indian subsidiary by its pa
The Financial Times reported on 1 October that India’s tax authorities have frozen Nokia’s assets in the country following a $321m (or approximately 20bn rupees) dispute ‘relating to income tax payments for mobile phone software licences, provided to [Nokia’s] Indian subsidiary by its parent company in Finland’, following a raid by tax inspectors at the company’s Chennai offices in January. Nokia said the demands were ‘excessive, unacceptable and inconsistent’, while the FT reported that a person close to the case believed it was likely related to Nokia’s recently-announced deal to sell its phone unit to Microsoft. Nokia launched an appeal to a court in New Delhi last week, a move which unfroze its bank accounts but left its fixed assets – including its manufacturing facility in Chennai – still affected. A spokesperson for Nokia told the paper: ‘We are in a dialogue with the government, and we have more than enough assets to settle our liabilities relating to this issue ... So we expect our deal [with Microsoft] to be completed on schedule by the first quarter of 2014.’
Dinesh Kanabar, head of tax policy at KPMG India, said: ‘For the authorities to seize assets for non-payment of tax in this way is not usual at all. It only happens if they think that someone is not likely to make these payments. The tax authorities do have some powers to object to any merger, so that can put pressure on the parties involved, and so it seems this is a move to give the tax authorities a chance to squeeze them [Nokia] for the money they believe is due.’
