Nokia's Indian tax bill could rise to $3.4bn

Nokia's Indian tax bill could rise to $3.4bn

Summary: Massive tax claims fly ahead of Nokia's day in a Delhi High court.

TOPICS: Nokia, Microsoft

Nokia's long-running tax dispute with India could be a lot worse than expected if unnamed tax officials are to be believed.

According to the Wall Street Journal, an Indian income tax official has told the paper that Nokia's tax bill could rise to $3.4bn from the original estimate of $340m (£237m).

The claim comes ahead of a Delhi High Court hearing on Wednesday over Nokia's dispute with India's tax authorities. Consequently, the company declined to comment on the figure.

"Nokia has not been served with any claim beyond what it received in February. In recent months we have seen and read about many claims from the tax authorities. We feel they are without merit and will defend ourselves vigorously in court," a spokesperson said in a statement to ZDNet.

Nokia and Indian authorities continue negotiations over assets, including Nokia's massive Chennai factory, which the Indian government froze in September to ensure Nokia pays the tax bill.

Indian authorities claim Nokia's subsidiary in the country owes the money after allegedly not deducting tax on payments made to Nokia in Finland for software installed on phones made in India since 2006.

Nokia also confirmed earlier reports today that it had offered to pay Indian authorities €270m to unfreeze those assets so that it could close the sale of its devices and service business to Microsoft.

According to Reuters, India's freeze on Nokia's Chennai factory will allow it to continue operating as normal, however it could complicate the transaction between Nokia and Microsoft.

Microsoft and Nokia are moving to close their €5.4bn deal that will see the Finnish company's devices business and its manufacturing plants move to Microsoft. With EU and US competition regulators' approvals now secured, the companies are expecting the merger to be completed in the first quarter of 2014.

Further reading

Topics: Nokia, Microsoft

Liam Tung

About Liam Tung

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, security and telecommunications journalist with ZDNet Australia. These days Liam is a full time freelance technology journalist who writes for several publications.

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  • Corrupt Indian establishment

    Indian tax authorities are one of the most corrupt in the world. No surprises that they increased their claim from $ 340 M to arounf $ 1.5 Billion and then to 3.4 Billion. That by itself shows that the claims lack credibility.

    Any Court of law would throw the claims out. But, the matter is at the Delhi High Court, where a Judge was reported to have been bribed INR 90 million. (Source: Radia tapes).
  • This factory will be left out of the deal

    Since it was slated to close anyway, nothing of value was lost.
  • Isn't that

    Microsoft's problem, since they bought the phone division?
    I hate trolls also
  • Corruption meets insecurity!

    One of the world's most corrupt countries which cannot even organize a simple country wide election without fraud has the guts to fine and penalize a multinational company that actually wants to create local jobs. And that on whimsical reasons.

    It beats me on how the underpaid tax amount can balloon to $3.4 billion in one week from $340 million.

    May be Nokia or Microsoft should just shut their factories in India jumping ship to China or SE Asia. A bad business environment coupled with punitive corporate oversight is just what that corrupt country needs to make themselves even poorer!