Nokia Corporation (ADR) (NOK) Embroiled In Another Dispute In India

Nokia Corporation (ADR) (NOK) Embroiled In Another Dispute In India
Hermann / Pixabay

Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) has been slapped with a $414 million sales tax bill from the Tamilnadu government alleging its handsets from Chennai plant were not exported but sold in India.

Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V), however, brushed off the new claim from the local state government as “absurd”.

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Mounting tax trouble

Last year, Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) was on the hook for about $375 million in taxes to be paid to India’s tax department. That claim was in connection with payments Nokia’s subsidiary in India made to Nokia itself in Finland. That dispute started last year after Indian officials raided Nokia’s main facility in Chennai.

Subsequently, when Nokia announced the deal with Microsoft Corporation (NASDAQ:MSFT), officials in India froze its assets in Chennai because of concerns that the struggling company would not have enough money to pay the tax bill.

Last week, the Supreme Court in India rejected the appeal of Nokia Corporation (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 latest sales tax dispute

Nokia said today it has received a new 300 million euro sales tax bill from Tamil Nadu.

In a statement the company said it has filed a writ petition to the Madras High Court to contest the claim from the Tamil Nadu tax department, which has moved to assess sales tax on the export of devices from the company’s Chennai facility.

In its statement, the company said it considers the claim to be completely without merit and counter to domestic tax laws. It clarified that in India, exports are by law exempt from tax and Nokia has proved consistently that devices produced at Chennai are exported abroad. Elaborating further, the company highlighted it has been regularly assessed and audited by the tax authorities since 2006 without incident, and it has also won several export awards from governmental organizations.

Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) also brushed off suggestions that the new case would complicate its 5.4 billion euro deal to sell its phone business to Microsoft Corporation (NASDAQ:MSFT). The company also said it anticipates to close the Microsoft deal by the end of this month.

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