India demands Nokia $383M over tax evasion claims; stay issued

Summary:The Finnish phone maker is accused of evading taxes in the region, which could see the company dinged in its latest financial results.

espoo-finland
Nokia's headquarters in Espoo, Finland (Credit: Nokia)

Nokia confirmed today it has been slapped with a tax demand by Indian tax authorities.

According to Reuters, the Finnish phone maker was hit with the income tax fine of 20.8 billion rupees ($383m) after it was accused by Indian tax authorities for allegedly evading taxes in the country for five fiscal years.

It comes only a month after one of Nokia's factories in India was raided by the country's tax authorities  as part of an investigation into the firm's "excessive, unacceptable and inconsistent with Indian standards of fair play and governance."

The tax demand was issued on March 15 but the order was only received by the company last week. An immediate stay was issued on the demand, allowing Nokia to appeal the decision.

Nokia has a cash pile of €4.4 billion ($5.9bn) sitting in the bank, according to the firm's latest financial earnings report in January . But Nokia's lawyer said it would "not transfer of remit any funds outside India" except as part of an ordinary business transaction, until the next court hearing. 

Nokia did not outright deny the allegations, but instead reiterated its position claiming "it is in full compliance with local laws as well as the bilaterally negotiated tax treaty between the governments of India and Finland."

The firm said it would also "defend itself vigorously."

For Nokia, India is a crucial market due to its size and emerging market base. This month it emerged that Nokia's annual revenue in India — its second largest market after China — fell by close to one-quarter  in 2012.

It comes only months after a recent tax-related scandal hit the U.K. markets after it turned out just how broken the tax laws are in the country .

Update at 10:00 a.m. ET: with headline change to reflect that this is a tax demand, not a fine.

Topics: Nokia, India

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

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