English | मराठी 

Finland welcomes Delhi High Court’s order on Nokia tax case


In a major relief to Nokia, the Delhi High Court on December 12 defreezed the assets of the Finnish firm India, including in Chennai, paving the way for their sale to Microsoft

nokiamicrosoftNew Delhi: Welcoming the Delhi High Court’s decision in the Nokia tax case, Finland has said it would help in expeditiously executing the sale of the telecom major’s assets to US-based Microsoft.

“I sincerely hope, though, that this conditional decision (allowing Nokia to transfer its Chennai factory to Microsoft) will enable the swift and effective release and transfer of Nokia’s Indian assets to Microsoft,” Finland’s Minister for European Affairs and Foreign Trade Alexander Stubb told PTI.

The Minister, however said, “In light of recent experiences of foreign companies, I still remain uneasy about India’s investment climate.”

Nokia and a string of multinational companies have come under the scanner of tax authorities of India. The companies have denied any wrong doing but tax authorities say they need to protect revenues.

The Income Tax Department had slapped a notice on Nokia’s Indian subsidiary for violating withholding tax norms since 2006 while making royalty payments to the parent company in Finland.

Among the major MNCs, British telecom giant Vodafone, US- based technology major IBM, and major oil company Shell are locked in tax disputes with Indian revenue department.

In a major relief to Nokia, the Delhi High Court on December 12 defreezed the assets of the Finnish firm India, including in Chennai, paving the way for their sale to Microsoft.

The Court, however, imposed certain conditions on Nokia India and its parent firm Nokia Corporation Finland.

Nokia had pleaded before the high court for a direction to the Income Tax department for lifting of the stay on transfer of assets, including the Chennai manufacturing plant, in view of its USD 7.2 billion global deal with Microsoft.

The deal involves sale of Nokia’s mobile phone and services division and licence to a patent portfolio to Microsoft.

A bench of justices Sanjiv Khanna and Sanjeev Sachdeva said, “We permit and allow sale of assets by Nokia India to Microsoft/Microsoft International.”

The bench at the same time asked Nokia India and Nokia Corporation (Corp) to fulfil certain conditions.

“Nokia Finland will be bound by the statement that they shall be jointly liable and shall pay tax demand determined and payable under Section 201/201(1A), interest and penalty thereon.

“Nokia Finland shall be liable to pay taxes, including penalty and interest due and payable by them, as determined under the Income Tax Act,” the bench said. Directing Nokia to deposit a minimum of Rs 2,250 crore in an escrow account, the court had said, “details of which will be furnished to the IT department within one month of the agreement with Microsoft/Microsoft International.

“The amount of deposit will go up or increase upon higher consideration being received from Microsoft as per valuation report,” it added.

An extended asset freeze as a result of the dispute would have blocked Nokia from transferring ownership of the Chennai plant, possibly forcing it to operate as a subcontractor for Microsoft.

Recently, the Finland government expressed concern that Nokia may be forced to shut the Chennai plant if the tax dispute was not resolved and assets remained frozen.


Leave a Reply