Nokia tax case: Finland seeks tax treaty settlement with India

Summary:Tax authorities from the two countries could be charged with sorting out whether Nokia's Indian operation owes 20bn rupees in tax on royalties paid to its Finnish parent.

The Finnish government hopes to settle Nokia's 20bn rupee (£237m) dispute with Indian authorities under a tax treaty between the two countries.

Finland has asked India to consider the case under a dispute resolution mechanism in the nations' double taxation avoidance treaty, which covers, among other things, how royalties are paid between the Indian subsidiaries of foreign companies and their parent operations abroad.

Nokia has confirmed the dispute resolution process had been invoked, but India may still reject the request, according to The Economic Times.

"We can confirm that the mutual agreement procedure under the India-Finland tax treaty has indeed been invoked, but given the fact that the tax case remains open, I'm afraid we cannot comment on any details at this stage. Nokia looks forward to a prompt and just resolution to the matter," a Nokia spokesperson said in a statement.  

If India gives the go-ahead, government authorities from each country will work out how best to resolve the case.

Indian tax authorities raided Nokia's Chennai plant in January . While no reason was given for the raid at the time, it later emerged that Nokia's Indian subsidiary was accused of failing to pay the correct amount of taxes over several years. 

India's income tax department issued a 20bn rupee tax bill to Nokia's Indian subsidiary in March for allegedly not deducting tax on payments made to Nokia in Finland for software installed on phones made in India since 2006, according to The Economic Times.

Topics: Nokia

About

Liam Tung is an Australian business technology journalist living a few too many Swedish miles north of Stockholm for his liking. He gained a bachelors degree in economics and arts (cultural studies) at Sydney's Macquarie University, but hacked (without Norse or malicious code for that matter) his way into a career as an enterprise tech, s... Full Bio

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