Nokia, Microsoft deal to close despite India tax dispute

Nokia, Microsoft deal to close despite India tax dispute

Summary: Nokia may have a massive $340 million tax bill to pay in India, but it won't stop Microsoft from snapping up its phone unit, the company says.

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TOPICS: Microsoft, Nokia
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(Image: CNET)

The sell-off of Nokia's phone unit to Microsoft is still expected to go ahead by the first-quarter of this year, despite rumblings that Indian authorities could scupper the deal.

The Microsoft-Nokia Deal

ZDNet's coverage of the Microsoft-Nokia deal

On September 2, 2013, Microsoft announced that it was buying out Nokia’s devices business for $7.2 billion. ZDNet has this story covered from virtually every angle and from perspectives across the U.S., Europe, Asia, and Australia.

The reason? Nokia has a $340 million tax bill to pay in the country, which the phone maker (soon to be Microsoft) holds dear to its heart as a crucial emerging market that generates the company billions in revenue each quarter.

To make matters worse, that figure could ultimately rise to as much as $3.4 billion.

Earlier this week, Nokia appealed a Delhi High Court ruling that stated it owed the back tax due to the improper exemption on software exports. While rumors suggested this alleged accounting snafu may hold back Microsoft buying Nokia's phone-making unit for $7.2 billion, the Finnish firm rejected such claims on Friday.

"Nokia would like to stress that recent developments in India related to ongoing tax proceedings are not expected to affect the timing of the closing nor the material deal terms of the anticipated transaction between Nokia and Microsoft," the company said in a release.

"The transaction is still expected to close in the first quarter of 2014, subject to regulatory approvals and other customary closing conditions, irrespective of the proceedings in the Indian tax case," it added.

U.S. regulators have already passed the deal, as did European authorities a couple of days later. Indian authorities at the center of the Nokia tax fury have also cleared most of the way for the deal to go through, ZDNet's Liam Tung reported in December.

Regulators in Russia, Israel and Turkey have already reportedly cleared the merger. 

Topics: Microsoft, Nokia

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  • So who inherits the tax liability?

    The article doesn't really say. It could easily be what's left of Nokia.
    John L. Ries