The Supreme Court in India rejected the appeal of Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) to overturn the ruling of a lower court, which required the Finnish company to pay millions of dollars before it can transfer its mobile device factory and other assets in the country to Microsoft Corporation (NASDAQ:MSFT).
Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) argued that the ruling of the lower court was unfair, but the Supreme Court upheld the decision and ordered the Finnish company to deposit 22.5 billion rupees ($368 million) in an escrow account.
The Supreme Court also required Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) to agree to pay any tax charges after the conclusion of related litigation. The court also ordered authorities to lift the restriction imposed on the company’s mobile device factory in Chennai.
Nokia express disappointment
In an e-mail statement to the Wall Street Journal, Bret Young, spokesperson for Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) wrote the company is “disappointed by today’s decision. The company strongly believes its offer to the Indian tax department is fair for all sides.”
Indian authorities want Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) to make deposits and pay future liabilities in cash, which is the main reason behind the company’s refusal to make a guarantee. The future liabilities of the Finnish company were estimated to be approximately $3.4 billion, and the lower court demanded an upfront payment of $500 million.
The tax officials claimed that Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) did not pay appropriate taxes on the royalty payments made to its subsidiary in the country. The Finnish company has 8,000 employees in India.
Tax dispute does not affect timing of Microsoft deal
Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) said the its tax dispute in India does not affect the schedule of the completion of its deal with Microsoft Corporation (NASDAQ:MSFT). The company expects to close the transaction before the end of this month.
The shares of Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) are slightly down at $7.52 per share around 2:50 PM in New York.
