Nokia settles tax issue in India paving way to sell phone manufacturing unit

Nokia has settled half-a-decade old tax dispute with the Indian Income Tax department under a mutual agreement procedure (MAP) system.
Nokia Finland job
The development clears way for sale of the Finland-based telecom equipment maker’s closed manufacturing plant in Chennai, Tamil Nadu.

“Dealings between India and Finland have been completed under MAP and the issue has been resolved. It appears that Nokia has agreed to make a provisional tax payment and pay Rs 1,600 crore tax demand made by the I-T,” a senior official in the department told TNIE.

The I-T department in 2013 issued a demand notice for Rs 2,500 crore on Nokia India over ‘royalty payment’ issues. The department reduced the demand notice amount to Rs 1,600 crore after rectification. The I-T department had also raised a tax demand of Rs 10,000 crore tax on Nokia India for the same transaction. The department has later dropped the demand for Rs 10,000 crore under the MAP agreement.

Nokia’s assets in India, including its manufacturing plant in Chennai had been frozen over the unresolved tax case. Nokia shut down the Chennai manufacturing plant — once the world’s largest mobile phone manufacturing plant — in 2014, terminating some 15,000 jobs.

The company had earlier expressed desire to sell the phone production plant, which is at present, is valued at Rs 350-400 crore. Microsoft, when it acquired the phone business of Nokia, could not complete the purchase the India phone manufacturing facility due to the tax issue.