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Nokia receives "absurd" 300 million Euro sales tax bill; new charges not expected to block Microsoft purchase

Posted: , by Alan F.

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Nokia receives
On Friday, Nokia's tax problem with the Indian government got a little worse as the Finnish handset manufacturer received a 300 million Euro tax bill ($414 million USD) from the state of Tamil Nadu. Nokia immediately called the bill "absurd." The 11th largest state in India, Tamil Nadu is alleging that Nokia handsets produced by its plant in Chennai were sold in India instead of being exported as Nokia claims.

If Nokia sold the devices in India, it would be responsible to pay taxes on the transactions. If Nokia exported the phones, there would be no taxes owed by Nokia. The latter filed a writ with the Madras High Court and a hearing is expected next week. Despite the legal issues involved, Nokia says that there should be no delay in Microsoft's purchase of Nokia Devices and Services. Nokia says that the deal will close at the end of this month, and could be announced April 2nd at BUILD 2014.

Nokia was ordered last week by the Indian Supreme Court to guarantee the Indian government 35 billion Indian Rupees ($573 million USD) and waive some of its legal defense rights in order to get the plant in Chennai turned over to Microsoft, which is part of the deal between the Redmond based software giant and Nokia. The factory is one of Nokia's largest handset manufacturing facilities and the Indian government had seized it alleging that Nokia owed it back taxes on phones sold over several years.

source: Reuters

52 Comments
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posted on 21 Mar 2014, 13:20 15

1. mikelemon (Posts: 93; Member since: 21 Nov 2013)


India can't tax its own country because the people are too poor so it is going after foriegn companies. India is a crook plain and simple.

posted on 21 Mar 2014, 13:29 10

5. PBXtech (Posts: 980; Member since: 21 Oct 2013)


It is what it is. Companies want to build factories in areas where work force wages are extremely low, then they need to start paying for things like this.

posted on 21 Mar 2014, 13:33 1

7. Ashoaib (Posts: 2376; Member since: 15 Nov 2013)


but nokia has a better way out by using the same amount to build a new plant in china... nokia should get away with it...

posted on 21 Mar 2014, 13:34 5

8. PBXtech (Posts: 980; Member since: 21 Oct 2013)


Are you familiar with the requirements for opening factories in China? The Chinese government wants access to any companies IP if they relocate there, I seriously doubt Nokia wants to give that up.

posted on 21 Mar 2014, 13:36 1

10. papss (unregistered)


I wouldn't want to give anything to china that I don't have to

posted on 21 Mar 2014, 13:39 5

12. PBXtech (Posts: 980; Member since: 21 Oct 2013)


You'd be surprised how many corporations due just to save a buck in wages and worker benefits. I lost a job after the factory I worked in was shut down and moved to China, and a large dose of IP was given up just to cut overhead.

posted on 21 Mar 2014, 14:41 1

23. Droid_X_Doug (Posts: 5921; Member since: 22 Dec 2010)


Vietnam seems to be building phones - based on the sources of leaks. China is even sourcing some of their component work from Vietnam as their labor cost has increased.

posted on 21 Mar 2014, 14:40 3

21. tumchaaditya (Posts: 71; Member since: 21 May 2012)


Be careful there.
Don't build a stereotype image based on limited knowledge.

posted on 21 Mar 2014, 14:40 3

22. Droid_X_Doug (Posts: 5921; Member since: 22 Dec 2010)


Indian govt. entities are piling on now. They see a target of opportunity. Expect the city where the plant is located to file next. Nokia should just deduct the cost of building a new plant from the sale proceeds they are going to receive from MS and let the Indian govt. units fight amongst themselves over the building and equipment. Meanwhile, the employees are out a good paying job.

Penny-wise and pound-foolish.

posted on 21 Mar 2014, 16:14 6

34. rd_nest (Posts: 808; Member since: 06 Jun 2010)


If the news was about Samsung/Google, you would have told us how corrupt Samsung or Google is.

Nobody (which includes your fav Nokia as well) should be allowed to exploit the law. If they are found to have used malpractices, they should be severely fined.

The court will decide, not you. If that means, Nokia has to go out of India, so be it. If anyone wants to do business in India, the law should be very strict irrespective of the brand. Just because it's a high value brand, doesn't mean they should be allowed to avoid taxes.

I say look into the books of each and every company and check who's not paying taxes. Make them suffer big time if they are not paying the taxes.

posted on 21 Mar 2014, 20:31 1

44. Altair (Posts: 335; Member since: 02 Feb 2012)


You should shut uo your ignorance troll mouth. You don't know anything about this case.

Nokia has payd these taxes to Finland already once. Finland and India has agreement about double taxing, which should protect companies that they dont need to pay the same tax to two different country. In this case India wants the money to payd to them, instead of Finland. India Goverment is corrupted and greedy. In this case they don't use any realistic numbers, instead they grap highest possible number they have guts to demand and hope they get the money. They can't tax its poor population, so they take the money where they can.

India is biting its own knee. Who wants to invest in corrupted and greedy country like India is.

Now get back to your dark closet and stay there please.

posted on 22 Mar 2014, 09:55 2

51. joey_sfb (Posts: 3114; Member since: 29 Mar 2012)


You should be the one the shut your gap. Did you even read the article. It's about Nokia selling the phones to the local market and not paying their sales tax.

posted on 21 Mar 2014, 22:15 4

47. asingha94 (Posts: 290; Member since: 08 Apr 2012)


lol!!you are in a cave!!see India's GDP in wikipedia for your basic knowledge!You are still living in old dogma

posted on 21 Mar 2014, 13:22 2

2. yadu004 (Posts: 63; Member since: 26 Apr 2013)


Well the Indian Economy is down, Majority imports to this country being "Electronic Items" rather than Gold or Petroleum,also there are not many Indian Electronic Equipment manufacturers who can rise up to International standards to contribute to the GDP, and then there are these companies which don't even bother paying tax to the government!!. :/

posted on 21 Mar 2014, 13:23 2

3. Beijendorf (Posts: 324; Member since: 27 Aug 2013)


And that's how you cripple your chances of having foreign investments, India. Well done.

posted on 21 Mar 2014, 13:30 5

6. yadu004 (Posts: 63; Member since: 26 Apr 2013)


Everybody has to pay Taxes!! Anyway If they have no foreign investments in the country better still. This would lead to a lot of startups from INDIA itself.Any foreign company doesn't contribute to a nation's GDP unlike the domestic ones.

posted on 21 Mar 2014, 13:50 2

14. Beijendorf (Posts: 324; Member since: 27 Aug 2013)


If you read the article, or better yet, head over to Reuters, you'll see the allegations seem made up. This combined with the other tax scandal from India makes this country a no-go for investors.

It's not about not paying taxes, it's about a foreign investor establishing a company and an industrial complex in a nation only to suddenly be slapped with billion dollar fines from a corrupt legal system.

Also, the very fact that you say "If they have no foreign investments in the country better still" makes me thing you have no idea how an economy works.

posted on 21 Mar 2014, 15:37 2

32. yadu004 (Posts: 63; Member since: 26 Apr 2013)


Even though I don't seem to be an expert like you, I'm probably of the belief that Domestic companies contribute more to the GDP than a foreign company does to a nation.Tell me if I'm wrong.

posted on 21 Mar 2014, 16:07 2

33. rd_nest (Posts: 808; Member since: 06 Jun 2010)


Who are you to decide what system is corrupt? Have you ever ran a country of 1.3billion population?

If not, I suggest you to keep your mouth shut. Nobody asked for your valuable suggestions.

posted on 21 Mar 2014, 16:25 3

35. Beijendorf (Posts: 324; Member since: 27 Aug 2013)


I don't need to run a country of 1,3 billion people to know the very simple definition of the word "corrupt".

Christ, dumb much?

posted on 21 Mar 2014, 16:32 3

37. Beijendorf (Posts: 324; Member since: 27 Aug 2013)


In fact, there's a whole giant section on Wikipedia solely dedicated to the corruption in India:

https://en.wikipedia.org/wiki/Corruption_in_India

posted on 21 Mar 2014, 17:40 1

42. phonetekmek (Posts: 70; Member since: 04 Oct 2013)


You need and want a mix and foriegn and domestic business. And if these are made up taxes and charges it will hurst foriegn investment. There is no way you can logically or especially ethically argue for legal extortion of a major international company. Imagine what happens to smaller corporations.

posted on 21 Mar 2014, 13:27

4. troutsy (Posts: 281; Member since: 17 Feb 2012)


I don't think you can use the phrase "the latter" following a sentence that doesn't have both a former and a latter.

posted on 21 Mar 2014, 13:35 2

9. papss (unregistered)


If true and they sold the phones in India then I agree they should pay but if not then India is grasping for staws

posted on 21 Mar 2014, 13:38 5

11. KenAdams (Posts: 55; Member since: 17 Feb 2014)


Woah! What's with the hate towards India? Every country charges taxes regardless of rich or poor. Well I'm a Nokia fan, but they gotta pay what they owe. And making phones in a country and selling them in the same country rather than exporting is a legal fraud as far as I know in India.
P.S - I've been to India.

posted on 21 Mar 2014, 14:45

24. marbovo (Posts: 658; Member since: 16 May 2013)


Are you sure what you are saying? In India a company can't make a phone and sell it in the domestic market? So every phone made in India has to be exported and every phone bought in India has to be imported?? That make no sense

posted on 21 Mar 2014, 15:19 4

30. corporateJP (Posts: 1760; Member since: 28 Nov 2009)


The issue here is Nokia is accused of making phones in India to be exported (no tax liability), but instead, sold them domestically and did not report them as such, therefore avoiding any tax liabilities.

Both sides are stupid here if this did in fact happen. Nokia for skirting the system and India for such a large sum of back tax requested. The real losers here are the folks with jobs at the factory.

I bet MS will squash this in the very near future.

posted on 21 Mar 2014, 23:07 1

49. Droid_X_Doug (Posts: 5921; Member since: 22 Dec 2010)


When a tax collecting entity thinks they have a fine they can collect, they tend to interpret the facts to suit their position. Then, they file all manner of liens and impounds that has the effect of gumming up the works (it put a halt to MS acquisition of Nokia's division). I will bet my last dime that is what is happening with Tamil Nadu - they think they can squeeze some $ out of Nokia, and they are making a hard push to do it. Someone's annual bonus is involved.

posted on 21 Mar 2014, 13:45 1

13. Sghero (Posts: 3; Member since: 13 Aug 2013)


Remind companies why not to go there to build factories or do any kind of business.

posted on 21 Mar 2014, 14:00

15. LikeMyself (Posts: 298; Member since: 23 Sep 2013)


Good for Nokia!
But now the Indian government needs to invest that money into nuclear weapons or energy instead of helping the poor people, right?
Glad I'm not Indian with all the bad attitude of the very rich towards the very poor. Coz the rich are among the richest in the world and the poor among the poorest destined to always beg for life!
And my general remark of the people there is that they are extremely money minded!

posted on 21 Mar 2014, 15:29 5

31. Jommick (Posts: 209; Member since: 10 Sep 2013)


Money minded can be said for just about any country out there. If you claim otherwise, I'd challenge you to not show up at work for the next week.

posted on 22 Mar 2014, 10:56

52. LikeMyself (Posts: 298; Member since: 23 Sep 2013)


Work is another thing,dear! It's not like people fool you into going to certain places to get commissions from the shop owners when you are on tourist tour!
And I didn't want to hurt anyone with my comment.So a big sorry and Cheers!

posted on 21 Mar 2014, 14:09

16. StraightEdgeNexus (Posts: 3586; Member since: 14 Feb 2014)


Yeah m$ can handle all money gamble. I have seen noticeable marketing boost and ad budget in nokia after being acquired by microsoft.

posted on 21 Mar 2014, 14:50 5

26. papss (unregistered)


Nice trolling.. This has nothing to do with m$ but you seem to have a hardon for them.

posted on 21 Mar 2014, 14:14 1

17. CX3NT3_713 (Posts: 2000; Member since: 18 Apr 2011)


Gooooooood laaaaawwd, that's alot of money!!!!! :-(

posted on 21 Mar 2014, 14:18 2

19. PAPINYC (banned) (Posts: 2315; Member since: 30 Jul 2011)


All things relative, it's not that much but, it is fraudulent of that Indian state to impose such tariffs, especially given the benefit to the local economy by way of jobs. There's noooooo way that many handsets remained in that one tiny impoverished and industrial state.

posted on 21 Mar 2014, 14:14 3

18. PAPINYC (banned) (Posts: 2315; Member since: 30 Jul 2011)


That's not absurd, it's downright ludicrous; most Indians can't even afford regular landline service. I'm no MicroSlush fan but, I implore the ITC to investigate.

posted on 21 Mar 2014, 14:31 2

20. KenAdams (Posts: 55; Member since: 17 Feb 2014)


Tiny industrial estate? FYI the Indian Economy is the 3rd largest by purchasing power in the world and 9th by GDP. If you call that tiny, then well, its tiny. And Nokia gotta pay what they owe. Its simple. Every country has different rules and regulations, if a company breaks that, then they've gotta pay up.
P.S - I'm not an Indian.

posted on 21 Mar 2014, 14:49

25. marbovo (Posts: 658; Member since: 16 May 2013)


If you consider the size of the population....

posted on 21 Mar 2014, 14:58 1

28. Martin_Cooper (Posts: 555; Member since: 30 Jul 2013)


And what if that tax bill is based on fake allegations and nokia didnt sell the phones in India?
P.S. You are referring to one corrupt country that has more than half of its population living bellow the poverty line, where an average person cant buy a small home, flat, or what so ever.

posted on 21 Mar 2014, 14:54

27. KenAdams (Posts: 55; Member since: 17 Feb 2014)


Well, i'm done explaining how the export & import procedure works. Judge all you want. :)

posted on 21 Mar 2014, 15:01 2

29. Martin_Cooper (Posts: 555; Member since: 30 Jul 2013)


Nothing works in India.. Nothing.. Corruption, poverty and lots of billionaires. No hate for the Indian people but their government.

posted on 21 Mar 2014, 16:30 1

36. PBXtech (Posts: 980; Member since: 21 Oct 2013)


5 out of 1565, yeah that's a lot of billionaires.

http://en.wikipedia.org/wiki/Forbes_list_of_Indian_billionaires

http://www.forbes.com/billionaires/list/#tab:overall

I really don't know where you get your opinions from, they definitely aren't facts.

posted on 21 Mar 2014, 21:54 1

45. anirudhshirsat97 (Posts: 400; Member since: 24 May 2011)


Lol, you think there are 5? Every effing top politician is an effing billionaire, just not officially.

posted on 21 Mar 2014, 21:55 1

46. anirudhshirsat97 (Posts: 400; Member since: 24 May 2011)


Yes, it's that bloody corrupt.

posted on 22 Mar 2014, 06:27 1

50. platformwars (Posts: 80; Member since: 14 Sep 2012)


India is Corrupt.. but that will change in the coming months.. with the new government coming in and all the govt depts going online there will be less scope for corruption.. The Indian people are also used to corruption and getting things done easily, for ex. the last day of filing a sales tax return is 30th Jan.. People submitted thier reports on 21st March but because of corruption they got it stamped at a back date.. but this will not happen once the system goes online coz the computer wont accept back dated returns..

this is just one of the examples im giving but now with everything getting computerized and online and with the RTI(Right of Information) coming in the corruption has come down a great deal.. will go down even more with the new govt.

Indiia is a country with 1.3 billion population and wages lower than China.. only if we get a good govt. at the center we can be the Worlds Factory..

posted on 21 Mar 2014, 16:52

38. zennacko (Posts: 236; Member since: 16 Jun 2013)


I'd pay double... to build elsewhere.

posted on 21 Mar 2014, 17:14 1

39. KenAdams (Posts: 55; Member since: 17 Feb 2014)


Hey PBXTech, in your comment #36, the article says that there are currently 61 billionaires in the India, in the last line of the paragraph. The 5 your referring to is just the most well known billionaires in the country. Did you actually read the article?

posted on 21 Mar 2014, 17:40

41. PBXtech (Posts: 980; Member since: 21 Oct 2013)


You got me, I stand corrected. I was in a hurry and missed that. Still though, considering the amount of people that live in India and the total amount of billionaires, it's still a very small amount. Less than 4% for the second most populated country on earth.

posted on 21 Mar 2014, 17:44

43. PBXtech (Posts: 980; Member since: 21 Oct 2013)


http://en.wikipedia.org/wiki/List_of_countries_by_the_number_of_US_dollar_billionaires

Little more digging revealed a better list.

Btw, I'm not saying there's no corruption in India, but it's not like Martin makes it out to be. He posted comments yesterday about rich people in China with the same incorrect slant. Both countries have far more poor people than rich people, which was my point.

posted on 21 Mar 2014, 17:35 2

40. hemedans (Posts: 204; Member since: 01 Jun 2013)


this case can be solved easly.

1. how many phone did nokia produce in their factory?

2. how many did nokia export?

difference between them is the number of phone sold inside.

posted on 21 Mar 2014, 23:02

48. nightfury (Posts: 61; Member since: 04 Dec 2013)


yes. we Indians are the most corrupt. .. our. govt is a joke....but how does that relatedto this...this money is nt going to any persons pocket

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