In a major blow to the never ending tax saga of Nokia in India, tax authorities have dismissed the company’s appeals against an income tax bill of Rs 2,080 crore, the company said.
Nokia’s India unit was served in March with the tax demand for five years starting from 2006/07, in one of several tax disputes involving foreign companies in India.
A couple of months before that the tax authorities had raided the company’s premises in Chennai for a suspected tax evasion to the tune of more than half a billion dollars.
Nokia said that it would examine all options, including taking the case back to the Delhi High Court., The high court was the one who had referred the case to the tax authorities’ appeals division.
Nokia in a statement said it believed it was in full compliance with Indian laws and a bilateral tax treaty between India and Finland. “Nokia is disappointed by the decision of the Commissioner of Income-tax Appeals, and will now examine all options open to it,” it said. Adding, “These include taking the case back to the Delhi High Court.”
India is crucial market for Nokia in an attempt to hold on to its global market share, which it has lately lost a lot of ground to global majors Samsung and apple and also homegrown brands such as Micromax and Lava.
If Nokia does end up having to play up the tax it will be difficult on the company, which has been making losses in the recent quarters. In the third quarter, Nokia reported a $754 million operating loss on a topline of $9.49 billion.
Nokia is just one of many multinational companies fighting legal tax battles in India.
As India seeks to rein in its budget deficit, the tax authority has been going after these companies. Some of the prominent cases are:
Tax authorities have demanded IBM to pay up over $200 million dollar for the assessment year of 2008-09. This case is in the Karnataka High Court.
Google has been slapped with a $14.5 million penalty for alleged tax evasion for the year of 2008-09. The company has appealed this to the Income Tax appellate tribunal.
Vodafone was asked to pay more than Rs 14,000 crore in tax and interest for its acquisition of Hutchison Essar by the UK based company for $11 billion.
Other companies like like Akamai Technologies, MSC Software Corporation, Microsoft, Cadbury, Royal Dutch Shell and LG Electronics are also entangled in various legal battles in different courts in the country.