Finnish telecom company Nokia’s taxation problem in India is likely to be taken up by Finland’s economic ministers in their meeting with Commerce and Industry Minister Anand Sharma this week.
But, India is ready to defend its case as it is on strong ground, a Commerce Department official told Business Line .
Easier visa norms to facilitate, at least the movement of intra-corporate transferees and other skilled personnel from India, will be on top of Sharma’s agenda, the official added.
Nokia, which has two manufacturing facilities in India, at Sriperumbudur and Kolkata, and a research and development centre at Bangalore, has been caught in a tax dispute since March.
The Income-Tax Department served a Rs 2,000-crore tax notice on the company relating to royalties on software downloaded on devices manufactured at Nokia’s Chennai plant.
The company had said in a statement that it was disappointed by the decision of the Commissioner of Income-tax Appeals, and would examine all options open to it including taking the case back to the Delhi High Court.
Nokia maintained that it was in full compliance with Indian laws as well as the bilaterally negotiated tax treaty between the Governments of India and Finland.
“Nokia will defend itself vigorously in this case and against any other Indian tax allegations, using all channels available,” the statement said.
“We have not breached our tax treaty and are within our sovereign rights to serve a notice on unpaid taxes. The company has to be in compliance with the country’s laws,” a Government official said.
Nokia manufactures over 8 lakh handsets a day at its Sriperumbudur facility and has about 8,000 employees.
Sharma will meet Finland’s Economic Affairs Minister Jan Vapaavuori and Foreign Trade minister Alexander Stubb on Wednesday. The Indian minister will take up the issue of Finland’s lengthy visa application process and grant of visas for a limited period of time. Proof of contribution to social security for extension of visa and work permit is another problem faced by Indian professionals in the country.
“The Minister is likely to point out that given Finland’s need for a high quality work force, it would be in its own interest to facilitate at least the movement of intra-corporate transferees and other skilled personnel from India,” the official said.
Although India’s bilateral trade with Finland is below $2 billion, about 140 Finnish companies have invested in India either directly or through subsidiaries.