Nokia hits out at «absurd» India tax claim

Dylan Bushell-Embling
24 Mar 2014

Nokia has protested a new Indian tax claim related to its Chennai manufacturing facility, calling the €300 million ($413.7 million) demand “absurd” and “without merit.”

The tax authority for the state of Tamil Nadu has issued a demand for sales tax on devices produced at the facility, claiming that the devices were sold in India.

But in a statement to Reuters, Nokia said devices produced at the facility are exported and sold abroad, and are therefore exempt from domestic sales tax.

Nokia claimed it has repeatedly provided documentation to Indian tax authorities proving that the devices are exported, and that tax authorities have repeatedly assessed and audited the company without incident since 2006

“Nokia will defend itself vigorously in this matter,” the statement adds.

The vendor is already involved in a larger tax battle over the Chennai plant, which is coming to a head as the company finalises the $7.2 billion sale of its devices business to Microsoft.

An Indian court recently ordered Nokia to give a 35 billion rupee ($574 million) guarantee before it transfers ownership of the plant to Microsoft - in addition to the 22.5 billion the company has already agreed to set aside while the case is being heard - to cover any future tax claims.

If the tax situation cannot be resolved, Nokia has warned it may ultimately have to shut down the plant, affecting some 8,000 employees and reducing the amount Microsoft will pay for its acquisition.

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