Nokia chief takes up tax dispute with Sharma

Amiti Sen New Delhi | Updated on February 12, 2014 Published on February 12, 2014

Risto Siilasmaa, Chairmanand Interim CEO, Nokia

Indian arm faces ₹21,000-cr I-T notice for violating withholding tax norms

Finnish company Nokia, which sold its handset business to Microsoft Corp late last year for $7.2 billion (₹44,650 crore today), wants India to allow the transfer of its Chennai plant to the US-based tech giant without too many conditions.

Nokia’s Chairman and Interim CEO Risto Siilasmaa met Commerce and Industry Minister Anand Sharma on Wednesday here to discuss the company’s future plans in the country.

Nokia is expected to hand over the business to Microsoft next month.

They also spoke about the company’s pending ₹21,000-crore tax dispute with the Income-Tax Department and the fate of workers at the Chennai plant.

“The question is whether we are allowed to transfer the factory to Microsoft. If we are not, we will have a factory, but we will not have a business. And if we don’t have a business, we can’t manufacture anything in the factory. And that would be detrimental to our employees,” Siilasmaa told reporters after the meeting.

Sharma said he will take up the matter with Finance Minister P Chidambaram.

The I-T Department had slapped a notice of ₹21,000 crore on Nokia's Indian subsidiary for violating withholding tax norms since 2006 while making royalty payments to the parent company in Finland.

Nokia’s assets in India, including the Chennai factory, were frozen late last year as the tax authorities feared that the company could wrap up its India operations without paying taxes.

The Delhi High Court, however, ordered the I-T department to unfreeze the assets and put in place a number of conditions that included parking of a minimum of ₹2,250 crore in an escrow account by Nokia, as a safeguard against any default. An escrow account is one in which funds are accumulated for specific disbursements.

“We had a very good discussion on the topic (of dispute) between Nokia and the local tax authorities, and the continuation of our Chennai factory. We are working to ensure that the factory will continue and, of course, we are concerned about the jobs at stake,” Siilasmaa said.

He added the company is exploring all possible means to find a solution to the problem.

Published on February 12, 2014
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