with the December 12 deadline for transferring Nokia’s assets to Microsoft nearing, Finnish finance ministry officials today met their Indian counterparts to discuss the mobile phone manufacturer’s Rs 21,153-crore tax dispute case.
A government official told The Indian Express that the two sides met and reiterated their positions on the tax liability of the Finland-based phone maker. While the Finnish tax authorities said that as per the existing double taxation avoidance agreement (DTAA), the treaty is taxable in Finland, the Indian side said that the payments made by the company’s Indian subsidiary to its parent were in form of royalty and hence taxable in India.
“We will meet them again in 2-3 months to discuss the developments,” the official 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. The tax department froze Nokia’s assets, following which Nokia moved the Delhi High Court.
On Monday, the I-T department told the Delhi High Court that Nokia India and Nokia Corporation owe it Rs 21,153 crore as total tax liability (existing and anticipated), including penalty during a seven-year period from 2006-2013. Nokia has offered to pay a minimum deposit of Rs 2,250 crore, which is not acceptable to the I-T department.
In September, Microsoft and Nokia announced that their boards have decided to enter into a transaction whereby Microsoft will purchase substantially all of Nokia’s devices and services business, license Nokia’s patents and use Nokia’s mapping services.
If the freeze in Nokia’s Chennai plant is not lifted, it could have a major impact on the deal.
High Court seeks more details from the company
New Delhi: The Delhi High Court has sought details of Nokia’s offer to the Brazilian government to settle its tax demand in that country while hearing its plea for lifting of the stay on transfer of its assets here in view of its $7.2 billion global deal with Microsoft.
Nokia’s counsel told the bench that in a similar tax matter in Brazil, an offer was made to the authorities there in the nature of bank guarantees, but they were only 5 per cent of the total tax demand in that country.
On the court’s query during the hearing if the Nokia Corp is ready to give any undertaking before this court, after seeking instruction from its client Nokia India, the lawyer said