Nokia's Chennai factory in Indian tax probe

Indian tax officials visit Nokia's Chennai manufacturing plant, reportedly over allegations of tax evasion of about US$545 million.
Written by Jamie Yap, Contributor

Finnish phonemaker Nokia said Indian tax officials visited its manufacturing plant in the city of Chennai. It did not give a reason, but media reports said it based on allegations of tax evasion of around INR 30 billion (US$545 million).

In an AFP report Tuesday, a Nokia spokesperson confirmed the visit: "Earlier today, tax authorities visited Nokia's manufacturing unit in Chennai. We are fully cooperating to ensure they get the necessary information to help in their inquiry. We always observe applicable laws and rulings in the countries where we operate."

Chennai's chief income tax commissioner S. Senthamarai Kannan had told reporters officials had conducted a "survey" of Nokia's factory, suspecting tax evasion of some INR 30 billion (US$545 million), AFP noted.

In a separate Reuters report, an unnamed Indian tax official said the investigations were related to allegations of the tax evasion. He was quoted as saying: "We are suspecting a default in TDS (tax deducted at source) on payments to other countries against software supplies."

India is Nokia's second largest market, and the Chennai factory produces over 20 different models for the Finnish handset giant, according to AFP.

A CyberMedia Research (CMR) report last October said Nokia was the top phone manufacturer in India, with 22.2 percent share of the total 102.4 million mobile handset shipped in the first half of 2012, thanks to its range of feature phones.

Nokia is not the only global multinational corporation (MNC) facing a tax probe in the country. Last week British telco Vodafone received another notice from Indian tax officials stating it owed more than US$2 billion in taxes on its 2007 purchase of a stake in a domestic telecommunications company--which is now called Vodafone India. The company has maintained its stance that it is not liable to pay any tax on the transaction, AFP said.

Indian Finance Minister, P. Chidambaram, has vowed clamp down on tax evasion to help to lower the country's wide fiscal deficit, it added.

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