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

Massive tax claims fly ahead of Nokia's day in a Delhi High court.
Written by Liam Tung, Contributing Writer

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.

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