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Nokia ordered by Indian Supreme Court to pay more to get factory returned

Posted: , by Maxwell R.

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Nokia ordered by Indian Supreme Court to pay more to get factory returned
The Supreme Court in India dealt Nokia a blow with a ruling that the device maker put up ₹35 billion ($571 million) before the Indian government transfer the manufacturing facility to Microsoft.

This ruling rejects Nokia’s appeal the India’s high court, comes less than two weeks after Nokia escalated its tax dispute and after the company already set aside ₹22.5 billion ($367 million) in an escrow account in order to secure the manufacturing plant from the government.

All this has stemmed from India demanding what it alleges are several years’ worth of back taxes from not only Nokia, but a host of other international companies with assets in India. The original tax bill was about ₹20 billion ($326 million), but penalties and interest could inflate that amount to as much as ₹208 billion ($3.4 billion). Naturally, Nokia has been hesitant to write a check.

Nokia stated that it was disappointed by the decision by the court, and that it was considering its options. If Nokia cannot transfer the facility to Microsoft, the former could operate under contract for the latter for a period of time, but “not for long.”  The most desirable goal is to transfer the property to Microsoft.

There is another option, Nokia could shut the plant down. That is a lose-lose-lose scenario though as it would cost India over 8,000 jobs in a tight economy, Microsoft would lose a critical manufacturing facility in India (a very important market), and Nokia would lose money out of the deal with Microsoft to acquire Nokia Devices and Services, expected to close at the end of this month.

source: Reuters India

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posted on 15 Mar 2014, 00:39 1

1. reckless562 (banned) (Posts: 1153; Member since: 09 Sep 2013)

dayum...... tough shizzle

posted on 15 Mar 2014, 10:26 2

15. MySchizoBuddy (Posts: 158; Member since: 23 Aug 2011)

so penalties and interest increase the taxes by 10x. that's what I call extortion.

posted on 15 Mar 2014, 22:51

25. joey_sfb (Posts: 6636; Member since: 29 Mar 2012)

My own government would hit me with tax penalty if I miss the date on paying my taxes.

My take is this would be resolve as the India government are not stupid that would force Nokia to take drastic steps.

Wanting 3.4 billions is stupid. They should just ask Nokia to choke up double and everyone walks away with their faces intact.

posted on 16 Mar 2014, 02:31 1

26. Ashoaib (Posts: 3229; Member since: 15 Nov 2013)

Nokia can easily build a new plant with this money in china, in a tax free zone... nokia should save this money to compete with other manufacturers instead of just throwing it off in a tax dispute

posted on 15 Mar 2014, 16:21 2

22. Ashoaib (Posts: 3229; Member since: 15 Nov 2013)

Better way for nokia is to build a new plant in china and shut this one...

posted on 15 Mar 2014, 00:44 9

2. SleepingOz (unregistered)

They deserved it!

posted on 15 Mar 2014, 12:32 2

19. engineer-1701d (unregistered)

i think nokia should say look we put this amount aside for the deal then you raised it 200 mil more we will not pay shut the plant you lose income and jobs for your people and we will build or put a bigger better plant up in a neighboring country thus you lose the money and jobs more then we do, courts are getting out of control with the penalty amounts and they said other host of other international company's. India courts get off your high horse know your place in the tech world Microsoft could disable your whole country sending you back to the stone-age days.

posted on 17 Mar 2014, 17:08

27. TheGenius (Posts: 339; Member since: 06 Mar 2014)

Look here mother fu*ker.
Say it in my face once and ill knock the daylights out of you.
I will send you back in your mother p*ssy

They cannot dare to threaten the Indian panel or the people.
Its has been the biggest market for Nokia once and now .. its the biggest opportunity for Microsoft.
If they dare as much as fling a stone on this country .. it will have a dramatic show in their earnings. !

posted on 15 Mar 2014, 00:44 1

3. QuadFace (Posts: 158; Member since: 19 Aug 2013)

than two weeks after Nokia escalated its tax dispute and after the company already set aside ₹22.5 million ($367 million)???

posted on 15 Mar 2014, 00:56 2

4. Droid_X_Doug (Posts: 5993; Member since: 22 Dec 2010)

I wonder how much it would cost to build a new factory for MS? Less than the taxes owed? Factory gets shut down.

I hope for the Indians sake, they aren't over-reaching.

posted on 15 Mar 2014, 00:58 7

5. ScottSchneider (Posts: 336; Member since: 06 Dec 2011)

I wouldnt say instant karma.. But, What goes around... Comes around...

posted on 15 Mar 2014, 01:18 2

6. theminolaboy (Posts: 128; Member since: 18 May 2013)

Microsoft, release the check.. That plant will be yours, right? LOL

posted on 15 Mar 2014, 01:55 1

7. mayur007 (Posts: 577; Member since: 10 Apr 2012)

microsoft u pay the tax .

else india court is helping nokia to be nokia n to stay away from microsoft

though its not

posted on 15 Mar 2014, 07:23 2

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

Microsoft didn't tun up the tax bill so why should they pay it? Plus the don't own Nokia yet and if this is not settled before the closing they will rework the figures to compensate them for it.

posted on 15 Mar 2014, 10:48 2

16. mayur007 (Posts: 577; Member since: 10 Apr 2012)

na i want microsoft to pay

posted on 15 Mar 2014, 11:38 5

17. lyndon420 (Posts: 5023; Member since: 11 Jul 2012)

I agree. Yes...if Nokia had been smart enough to adopt the Android platform back when they were still a market leader, they most likely would have stayed viable and strong enough on their own to keep going forward without needing help from ms....but seeing as ms kept Nokia in jeopardy by insisting they go exclusively with WP I say ms should pay. Ms reduced Nokia stock to the point of being borderline worthless by pitching a platform that was in its infantcy and not even half baked. I'm of the opinion that ms needs Nokia more than the other way around now...especially since Nokia is finally starting to see the light when it comes to Android.

posted on 15 Mar 2014, 13:01 1

21. mayur007 (Posts: 577; Member since: 10 Apr 2012)

n they are responsible for slow update as well

posted on 15 Mar 2014, 16:40 2

23. lyndon420 (Posts: 5023; Member since: 11 Jul 2012)

Yes...while Nokia was waiting for ms to finish developing their new WP platform the value of their company went into a steady decline and they lost many talented employees.

posted on 15 Mar 2014, 03:48 2

8. Sniggly (Posts: 7305; Member since: 05 Dec 2009)

This could just be a case of extortion by the Indian government, but then again, Nokia could have just not paid the taxes.

If so, they'd be stupid not to pay the taxes now and just get it over with. Otherwise they'll lose a lot of that all important good will they have with the Indian people, which no cheapass phone they make could recover.

posted on 15 Mar 2014, 05:47 5

9. ScottSchneider (Posts: 336; Member since: 06 Dec 2011)

Sniggly.. They actually did not pay the taxes. Nokia India did not include some items in the Import Invoices which made the government officials to believe that the tax for all the materials in it were paid for mobiles that were sent to Finland only and not the others,. Actually it goes like this.., They were given tax waivers/evasion for materials they purchase inside a Special Economic Zone and also since they had this waiver, they had to pay a local tax to move phones from the factory to the finished materials hub and then to the stores located near their factory. But what they actually did was, exported mobiles with the "software" right from the start of the factory from 2006 which they did not bring it to notice in their shipping Invoice or BoM. Once the Indian officialy came to know about this as the software which was actually prepared locally they demanded a 20-30% excise duty to be paid for all the shipment made to their Parent company in Finland. When this information was leaked, Nokia India moved most of their liquid cash from India, which was around $3billion to Finland. IF that money had been here, the Income Tax officials would have freezed that account which would have been a bad blow for Nokia. They actually predicted that and moved it to Finland. When questioned by the Higher court of India as to why they actually moved the cash out of India, as they had actually had an agreement that they are going to be in business in India. But in-turn their assets were frozen which would unable them to make the final transition of coming under the MS brand.

posted on 15 Mar 2014, 06:03

10. GTX_Ti (unregistered)

Your comment gave me paralysis.

posted on 15 Mar 2014, 06:42

11. ScottSchneider (Posts: 336; Member since: 06 Dec 2011)


posted on 15 Mar 2014, 08:33

13. GTX_Ti (unregistered)

Omg ! its so huge. I think it would have taken 30 min atleast for you to frame it. I like your patience.

posted on 15 Mar 2014, 10:14 1

14. PBXtech (Posts: 1032; Member since: 21 Oct 2013)

Sounds like Tax Collection 101. The IRS is notorious for tacking on fees and penalties for unpaid taxes, sounds like India works the same angle.

posted on 15 Mar 2014, 12:40 1

20. engineer-1701d (unregistered)

yeah but when they mess up and owe you and you tell them they dont pay like with me, but since its the government and they want money you cant stop them, my indian family that had companys over there told me about the under the table payments and extortion that local governments would do to get money for them, they may have had a under table deal then ms says i am buying nokia greedy money people say good i want the back tax money before they go you want nokia i want money looks good on paper and news but deals made under the table are void now. cant trust governments. greedy politicians

posted on 15 Mar 2014, 12:11 2

18. zennacko (Posts: 237; Member since: 16 Jun 2013)

If I was Microsoft's CEO I would do like all my "competitor buddies" and move to China. India may be an important market for them, but I wouldn't fork over millions after millions of dollars on a clear case of tax extortion. And then I would wish the best of luck to India on reemploying those 8000 newly-unemployed guys on some telemarketing service.

posted on 15 Mar 2014, 17:39 1

24. roscuthiii (Posts: 2249; Member since: 18 Jul 2010)

PhoneArena... Hire an editor:

"This ruling rejects Nokia’s appeal the India’s high court,..."???

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