Nokia asks India to allow it to transfer plant to Microsoft

Finnish giant Nokia, facing a reported $3.4-billion Indian tax claim, asked in court Tuesday to be allowed to transfer an Indian factory to US giant Microsoft under the sale of its mobile phone business. The Finnish company asked the Delhi High Court to lift a stay on transfer of its assets so it can hand over the manufacturing plant in Chennai under the $7.2-billion deal to sell its mobile phone operations to the US tech giant. Nokia has offered to pay a minimum deposit of 22.5 billion rupees on the Indian tax demand for 211.53 billion rupees ($3.4 billion), but the income tax department said the offer is not acceptable, the Press Trust of India reported. The tax department told the Delhi High Courton Monday that Nokia India and Nokia Corp owed it the $3.4 billion from existing and anticipated tax liabilities, including penalties, for a seven-year period from 2006-2013, the news agency said. Nokia said in an emailed statement Tuesday to AFP it had not received any formal claim from Indian authorities for $3.4 billion in back taxes, but vowed to defend itself "vigorously" against any such demand. "Nokia has not been served with any claim beyond what it received in February," the company said. "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," Nokia added. Indian tax authorities had before said that Nokia owed some 20.80 billion rupees in taxes. Nokia's Chennai plant in south India, whose transfer has been frozen by Indian authorities, is one of its biggest manufacturing facilities. The Finnish company, which is selling its mobile phone division to focus on network equipment, said the plant may have to be excluded from the sale agreement if the company's assets are not released by Thursday. The Microsoft deal is due to close early next year. Indian and Finnish government officials discussed the tax dispute in New Delhi and reviewed the countries' double taxation avoidance agreement but the talks were inclusive, the Press Trust of India reported. Finland's Foreign Minister Erkki Tuomioja has warned that failure to resolve Nokia tax case before Thursday might lead to closing down of the Chennai plant, which employs 8,000 people and includes productions lines, maintenance assembly and testing operations, the Press Trust of India said. The alleged tax evasion involves software royalty payments to Nokia's parent, on which 10 percent tax should have been deducted and paid to Indian authorities, the income taxdepartment claims. The Finnish firm is among a string of multinationals facing tax problems in India, including Cadbury, Royal Dutch Shell and Vodafone. Nokia called on the Indian government and tax authorities in a separate statement "to work with urgency toward a solution" before the Thursday deadline for transferring the Chennai plant to Microsoft.