Nokia's income-tax dispute resolved, Chennai plant likely to be sold to Foxconn
21 April 2018
The five-year-long dispute between the Income-Tax Department and Nokia India is finally coming to an end, with the latter agreeing to pay the tax demand of Rs1,600 crore and the former deciding to drop the additional demand of Rs10,000 crore.
Coinciding with the visit of Prime Minister Narendra Modi to Sweden, where he attended the first India-Nordic Summit and also interacted with Finnish premier Juha Sipilia, the move will result in the Finnish multinational finally being able to sell its Chennai plant.
The Income-tax department had initially issued a demand notice for Rs2,500 crore in 2013 against Nokia. This was later reduced to Rs1,600 crore, but as the dispute continued over the years, the IT department slapped an additional Rs10,000 crore demand.
But, with India and Finland having signed a Mutual Agreement Procedure (MAP), the dispute has now been resolved. Nokia has also agreed to pay Rs1,600 crore, while the IT department has dropped the Rs10,000 tax demand. Settling a dispute between two countries under the MAP means that all other pending proceedings are also dropped.
The Chennai plant was once one of the world’s largest mobile phone manufacturing facilities. It was shut down in 2014, leaving 15,000 employees jobless.
Incidentally, when Microsoft acquired Nokia’s global devices and services business, including some assets in India, for $7.2 billion about three years ago, it decided to leave the Chennai facility out of the agreement.
According to industry sources, Taiwanese contract electronic manufacturer Foxconn is likely to buy the Chennai plant from Nokia. Tamil Nadu government sources have confirmed that Foxconn – which also manufactures mobile phones for Xiaomi of China next to the Nokia plant in the state – has been in touch with the government on reviving the plant.