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

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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24 Comments

1. reckless562

Posts: 1153; Member since: Sep 09, 2013

dayum...... tough shizzle

15. MySchizoBuddy

Posts: 159; Member since: Aug 23, 2011

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

25. joey_sfb

Posts: 6794; Member since: Mar 29, 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.

26. Ashoaib

Posts: 3309; Member since: Nov 15, 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

22. Ashoaib

Posts: 3309; Member since: Nov 15, 2013

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

2. SleepingOz unregistered

They deserved it!

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.

27. TheGenius

Posts: 339; Member since: Mar 06, 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. !

3. QuadFace

Posts: 179; Member since: Aug 19, 2013

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

4. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 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.

5. ScottSchneider

Posts: 336; Member since: Dec 06, 2011

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

6. theminolaboy

Posts: 128; Member since: May 18, 2013

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

7. mayur007

Posts: 593; Member since: Apr 10, 2012

microsoft u pay the tax . else india court is helping nokia to be nokia n to stay away from microsoft though its not

12. phonetekmek

Posts: 70; Member since: Oct 04, 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.

16. mayur007

Posts: 593; Member since: Apr 10, 2012

na i want microsoft to pay

8. Sniggly

Posts: 7305; Member since: Dec 05, 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.

9. ScottSchneider

Posts: 336; Member since: Dec 06, 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.

10. GTX_Ti unregistered

Your comment gave me paralysis.

11. ScottSchneider

Posts: 336; Member since: Dec 06, 2011

Why...?

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.

14. PBXtech

Posts: 1032; Member since: Oct 21, 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.

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

18. zennacko unregistered

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.

24. roscuthiii

Posts: 2383; Member since: Jul 18, 2010

PhoneArena... Hire an editor: "This ruling rejects Nokia’s appeal the India’s high court,..."???

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