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Nokia/Microsoft deal stalled by Indian tax dispute

  • By imposing conditions Nokia (NOK -2.6%) deems to be "unacceptable," an Indian court has halted the transfer of Nokia's massive Chennai phone manufacturing plant (employs 30K people) to Microsoft (MSFT +0.9%), and in doing so has further stalled the sale of the former's phone unit to the latter.
  • The halt is tied to Nokia's ongoing $1.1B tax dispute with the Indian government. Nokia has responded by appealing to India's Supreme Court. In the meantime, chairman Risto Siilasmaa is meeting with government figures in an attempt to find a resolution.
  • Nokia, whose shares are selling off today, once more suggests (previous) its Indian manufacturing ops could be moved elsewhere on account of the dispute. "It seems that working with the tax authorities here in India can be very hard and unpredictable, which is clearly not good for businesses."
  • Previous: Indian court lifts freeze on Nokia factory
  • Update: Nokia says it doesn't expect the tax dispute to stop the Microsoft deal from closing in Q1.
Comments (70)
  • Seppo Sahrakorpi
    , contributor
    Comments (1948) | Send Message
     
    It is fundamentally incorrect to state that the deal itself would be stalled by the Indian tax problems.

     

    The deal itself has already been approved by the Indian authorities late last year. Only the Chinese approval is still pending.

     

    Nokia has clearly said several times that the deal will go ahead regardless of whether or not Chennai plant is part of that deal. Chennai in the end is not materially relevant enough to derail the deal. The factory is worth a few hundred million dollars, that's all.

     

    With the dropping demand for feature phones (that Chennai produces) having to leave Chennai out of the deal might be a blessing for MSFT, since they can always ramp up capacity in the new Vietnam facility for this purpose.

     

    The relevance of this Chennai business is the tax implications for Nokia, that's all. Even on that note the earlier court decision was clear that Nokia Group is not liable for Nokia India taxes beyond the value of the Chennai facility.

     

    In short, nothing has changed materially to prevent the D&S sale from happening in near term future.
    12 Feb, 11:02 AM Reply Like
  • sidiji
    , contributor
    Comments (168) | Send Message
     
    exactly, this is erroneous reporting as nokia has said it and Microsoft will finalize deal with or without the Chennai indian plant of its subsidiary.
    12 Feb, 04:25 PM Reply Like
  • sidiji
    , contributor
    Comments (168) | Send Message
     
    SA Editor needs to go re-take his remedial English as a second language class...nothing worse than an idiot arguing about his own ignorance.
    13 Feb, 08:28 AM Reply Like
  • WarehmPunter
    , contributor
    Comments (10) | Send Message
     
    "Stalled" implies that the deal is just that, stopped. It is not stopped nor will it probably be stopped. Both parties knew before they entered into their agreement that there was a tax issue, and they undoubtedly had some contingency built into the agreement. The Indian government thinks they have Nokia up against the wall, and in a sense they do, but things like this go on all the time, this to shall pass. Nokia certainly had competent tax counsel advising them.
    12 Feb, 11:02 AM Reply Like
  • anil92691
    , contributor
    Comments (391) | Send Message
     
    Stalled means....the sale escrow is delayed.
    12 Feb, 11:24 PM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1948) | Send Message
     
    From the FT article:

     

    "...High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://on.ft.com/1cwfSy4

     

    Nokia has suffered a big reversal in its tax row with India’s government, stalling the transfer of its assets in the country to Microsoft and prompting the Finnish group to launch a supreme court appeal.

     

    The reversal threatens the future of Nokia’s main manufacturing facility in the southern city of Chennai, which employs around 30,000 people. That factory was due to be transferred to Microsoft as part of Nokia’s €5.4bn phone business sale...."

     

    Note that they _do not_ say that the deal itself is stalled, just that the transfer of Chennai is stalled. That the whole deal is stalled is just an incorrect conjecture by SA.
    12 Feb, 11:07 AM Reply Like
  • SA Editor Eric Jhonsa
    , contributor
    Comments (829) | Send Message
     
    There's nothing inaccurate about it. Note there's a big difference between "stalled" and "derailed." The deal will eventually happen, but Microsoft wants the plant, and so the Indian government's actions are (for now) stalling the deal's closing.

     

    The WSJ spells it out a little better:
    http://on.wsj.com/1eQeXhM

     

    "Microsoft and Nokia agreed to a deal in September and now have about 45 days remaining to close the transaction, or risk missing a first-quarter deadline. Nokia could close the deal without transferring the Chennai factory, but such a move would severely complicate the transaction because millions of handsets are built there annually."

     

    "We are now beyond deadlines and into overtime," a Nokia spokesman said about the issue. "Time is really of the essence now."
    12 Feb, 11:14 AM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1948) | Send Message
     
    The D&S sale deal has not "been brought to a standstill, nor has its progress being halted" (i.e. using the definition "stalled"), it has only been perhaps complicated (the wording WSJ uses) or slowed down:
    http://bit.ly/1cwj8JC

     

    Stalled is too strong and incorrect wording regarding the whole D&S deal in this case.
    12 Feb, 11:22 AM Reply Like
  • SA Editor Eric Jhonsa
    , contributor
    Comments (829) | Send Message
     
    Its progress has been halted, insomuch as the tax dispute is preventing the deal from closing for the time being. Claiming the use of "stalled" is inaccurate in such a context goes beyond splitting hairs in my book.
    12 Feb, 11:32 AM Reply Like
  • sidiji
    , contributor
    Comments (168) | Send Message
     
    you need to fix the title as it is clearly erroneous and misleading. Nokia has said the deal with Microsoft will close this quarter with or without the indian sub's plant...there is no stalling here.
    12 Feb, 04:27 PM Reply Like
  • sidiji
    , contributor
    Comments (168) | Send Message
     
    That is pure speculation on your part, where is your source? exactly you don't have one because this issue is not preventing the deal closing as you've claimed...very disappointed with SA for putting up clearly biased info without basis in fact.
    12 Feb, 04:29 PM Reply Like
  • anil92691
    , contributor
    Comments (391) | Send Message
     
    Pay the taxes. And then Nokia can choose not to do business in India and find another tax haven. After all the factory was established in Chennai to save taxes and not to help the workers in Chennai.
    12 Feb, 11:27 PM Reply Like
  • mr wonder
    , contributor
    Comments (546) | Send Message
     
    Anil92691, you must be working for India tax administration. How about Nokia went to India because there was a great market for feature phones and Nokia could minimize costs because of efficient distribution and lower labor costs?
    14 Feb, 09:01 AM Reply Like
  • Timothy Bryan
    , contributor
    Comments (757) | Send Message
     
    scrap and plant and close the deal!
    12 Feb, 11:08 AM Reply Like
  • JoFergus
    , contributor
    Comments (46) | Send Message
     
    Dear Eds.
    That headline is factually incorrect (insomuch as the D&S acquisition deal is NOT stalled by this issue), and moreover it's highly misleading.
    12 Feb, 11:18 AM Reply Like
  • SA Editor Eric Jhonsa
    , contributor
    Comments (829) | Send Message
     
    I hope you're joking. It's pretty obvious the headline references the deal's closing, rather than the original agreement. Arguing otherwise amounts to engaging in semantics.
    12 Feb, 11:24 AM Reply Like
  • dayo soyemi
    , contributor
    Comments (136) | Send Message
     
    "Nokia/Microsoft deal stalled by Indian tax dispute"
    Eric, when I read the headlines, my full take was that if the tax issue (which will largely affects the factory in India) is not resolved, the deal will not close and in this case, (stalled) on time.
    Unfortunately that is not true and the headline is very misleading, because, if the tax issues are not resolved on time or not, it neither stops nor delay the deal.
    Reading your extracts and links to this subject matter provided above confirms that, but somehow you did not see it misleading. Well, I totally do and that is not semantics.
    12 Feb, 12:23 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7979) | Send Message
     
    Eric,

     

    If you're saying the deal will stall because of this, it may or may not. The Wall St Journal you are referencing also says, "If Nokia is unable to resolve the issue, the Indian factory won't be part of the asset transfer to Microsoft. . .That would force Nokia to remain as a contract manufacturer of mobile phones for Microsoft for a transitional period." To me, that implies the deal is done, although asset transferal may be problematic.
    -
    Please where does it say the deal will not close on time?
    12 Feb, 06:18 PM Reply Like
  • JMstocks75
    , contributor
    Comments (250) | Send Message
     
    payoff of 250k to right person will resolve, that's how Indians do biz
    12 Feb, 11:30 AM Reply Like
  • mKiwi
    , contributor
    Comments (651) | Send Message
     
    An estate with titles in Microsoft Vale. That is simply lubricating the wheels of progress lol
    12 Feb, 05:28 PM Reply Like
  • La Rue
    , contributor
    Comments (751) | Send Message
     
    Stalled =BS
    12 Feb, 11:55 AM Reply Like
  • JoFergus
    , contributor
    Comments (46) | Send Message
     
    Eric
    You suggest that the headline "obviously references the deal's closing" rather than the original agreement - as though there's an implicit difference. Seems you're the one getting bogged down in semantics, rather than just writing an accurate headline.

     

    Anybody who reads that headline is going to simply read that the MS/Nokia deal is stalled.

     

    Since you now suggest that it's "the deal's closing" that is stalled (again, you're making a rather peculiar semantic distinction), let's reference some facts from the WSJ:

     

    "Nokia could close the deal without transferring the Chennai factory..."

     

    Make note: At no point have any party's indicated that this tax issue would "stall" the Nokia/MS deal. At best, you can factually state that the D&S deal with MS is "complicated" by the tax issue.

     

    "If Nokia is unable to resolve the issue, the company would be forced to remain as a contract manufacturer of mobile phones for Microsoft for a transitional period"

     

    You should simply strive for responsible accuracy, and avoid misleading ambiguity and engaging in "semantic" deflections. Sorry to have to point this out.
    12 Feb, 12:07 PM Reply Like
  • dayo soyemi
    , contributor
    Comments (136) | Send Message
     
    You don't have to be sorry, I shared similar view as response to Eric.
    12 Feb, 12:30 PM Reply Like
  • SA Editor Eric Jhonsa
    , contributor
    Comments (829) | Send Message
     
    "Anybody who reads that headline is going to simply read that the MS/Nokia deal is stalled."

     

    Only someone who's intent on reading more into that headline than is implied would assume that headline means anything has happened to the original agreement. As the bullets subsequently spell out, It clearly means the deal's progress towards closing has stalled. And again, "stalled" by no means is the same as "derailed."

     

    "Nokia could close the deal without transferring the Chennai factory..."

     

    Nice job of cherry-picking a line from the WSJ column. The passage continues as follows: "but such a move would severely complicate the transaction because millions of handsets are built there annually."

     

    It's clear that Microsoft wants the plant, and that the dispute is holding up the closing of the transaction. Hence, it's being stalled. Period.

     

    I swear, I only deal with these kinds of arguments with Apple, Nokia, and BlackBerry investors. Mostly because they're religions for many of their followers, rather than mere companies.
    12 Feb, 02:59 PM Reply Like
  • sidiji
    , contributor
    Comments (168) | Send Message
     
    why are you persisting in your error? I have no bias either way and reading your headline clearly was mislead. instead of fixing it you spend energy arguing pointless semantics
    12 Feb, 04:31 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7979) | Send Message
     
    Eric,
    Again, the Indian debacle does not mean " It clearly means the deal's progress towards closing has stalled," as I pointed out above. It means that the Indian assets may not be transferred.
    12 Feb, 06:20 PM Reply Like
  • toraji
    , contributor
    Comments (787) | Send Message
     
    Seems like you are cherry picking Eric. "Stalling" is way to big of a word, surely this must have been fun to publish right? Clearly nobody agrees with you, I guess that our religion is 'stalling' our blurred brains.......

     

    ;-)
    12 Feb, 08:19 PM Reply Like
  • Andreas Hopf
    , contributor
    Comments (8577) | Send Message
     
    One thing is certain: Nokia's SP is stalling since October 2013.
    13 Feb, 03:19 AM Reply Like
  • Omarsiddiqi
    , contributor
    Comments (25) | Send Message
     
    In a multi national company like Nokia issues like these are bound to happen. This has no affect on the final sale of D&S but does provide a good opportunity to buy some more.

     

    My main concern regarding Nokia are not tax issues but rather a lack of clarity in what they are planning to do. I'm sure things will settle down and that will eventually be clear but as of now ill be investing in a company i'm not sure has a clear direction.

     

    I think in the short term there are a some catalysts like the picking of a new CEO which might move the stock back in the 8's.
    12 Feb, 12:23 PM Reply Like
  • sph0308
    , contributor
    Comments (67) | Send Message
     
    I must have missed something. I thought that Nokia received a court ruling "unfreezing" the Chennai plant in order for this asset to be transferred over to MSFT. Was there a reversal of this "unfreezing" and that is why Nokia has to now go to the Supreme Court ?
    12 Feb, 12:25 PM Reply Like
  • asifruman
    , contributor
    Comments (75) | Send Message
     
    This tells me some good thing is coming soon....!! these are just pressure tactics.
    12 Feb, 12:27 PM Reply Like
  • Andreas Hopf
    , contributor
    Comments (8577) | Send Message
     
    No CEO. No strategy. No leadership.

     

    Already 5 months chaos at Nokia, once a model of a structured business.
    12 Feb, 12:52 PM Reply Like
  • Timothy Bryan
    , contributor
    Comments (757) | Send Message
     
    agreed, for once...
    12 Feb, 01:34 PM Reply Like
  • BBcool
    , contributor
    Comments (450) | Send Message
     
    premature to expect such disclosures. Remember Microsoft deal still not in place.
    12 Feb, 02:34 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7979) | Send Message
     
    AH,
    Nokia's hands are kinda tied here, since MS is definitely in on the negotiations behind the scene. Otherwise, Nokia could play hardball and just tell the Indian government, "You have five days to make up your mind whether or not you want Nokia/Microsoft in your country providing 30K jobs, since we simply must close the deal and transfer assets now. If you persist, that's fine. We will leave India for Vietnam, where business is easier to conduct, and rebuild full scale there."
    -
    In that case, India (1) Gets no money except what the factory is worth, (2) Gets no future tax revenue from either MS or Nokia, (3) Loses 30, 000 jobs.
    12 Feb, 06:24 PM Reply Like
  • Freddo70
    , contributor
    Comments (25) | Send Message
     
    Here comes the broken record again....next to a guy that desperately is trying to defend a misleading. :)
    And you guys are commenting/analyzing how other people run complex organisations.....is this joke?

     

    Thanks for restating the real facts Seppo!
    12 Feb, 06:32 PM Reply Like
  • toraji
    , contributor
    Comments (787) | Send Message
     
    Real happy for you alu is taking of ah ;-)
    12 Feb, 08:41 PM Reply Like
  • anil92691
    , contributor
    Comments (391) | Send Message
     
    Tax evasion comes with jail terms. That also means that some senior employees of Nokia will go to jail. And I am sure these are Finnish employees. They can run out of the country never to return and hope that this crime does not come under Interpol. But then all Finnish companies get affected!

     

    The Indian bureaucrats are not dumb. They are some of the most brilliant minds in India. The Indian Govt. gets nothing if the taxes are not paid. The factory can be auctioned off, which will probably bring 10 to 25 cents to the dollar. Tax evasion is what they will hold Nokia responsible for. That comes with paying the tax amount, a hefty interest and jail terms.

     

    And as for threats, the West thinks they can pull that when they feel like. The Income Tax Dept. does not care about the 30K jobs. What they care about is that they are not taken lightly.
    12 Feb, 11:37 PM Reply Like
  • Timothy Bryan
    , contributor
    Comments (757) | Send Message
     
    You are an idiot and a fool anil...
    12 Feb, 11:40 PM Reply Like
  • jjmc2001
    , contributor
    Comments (1291) | Send Message
     
    Interesting journalistic jousting going on here. Thanks to all for the clarifications. The sad part of this story is that several other multinational companies with operations in India have fought similar battles. In the case of NOK there is a larger deal that makes this relatively small tax issue newsworthy. The real story is much larger in that India needs to honor the various tax treaties it has with other countries and rid themselves of any ambiguity and corruption in enforcement of tax laws. Until that happens a company would have to give pause to any investment in India.
    12 Feb, 01:10 PM Reply Like
  • BlueOkie
    , contributor
    Comments (5367) | Send Message
     
    The bigger point is that if India continues this kind of actions (this is not isolated), it'll lose the investment it needs to grow GDP. So much for the BRICS - they are falling one by one.
    12 Feb, 01:46 PM Reply Like
  • wigit5
    , contributor
    Comments (4101) | Send Message
     
    I've yet to find a company who candidly says that they like dealing in India... the really poor there are the ones that suffer the most unfortunately...
    12 Feb, 02:27 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7979) | Send Message
     
    Wigit,
    That is true, and as always, it is leadership that dooms the entire population. Same reason Afghanistan is still in the stone age. I just really can't see what the Indian authorities hope to achieve with this posturing, except a loss of even more tax revenues and a lose of ongoing business employment in their country.
    12 Feb, 06:27 PM Reply Like
  • timoeranko
    , contributor
    Comments (63) | Send Message
     
    RISTO SIILASMAA IS A WOLF IN SHEEP'S CLOTHES. HE KNOWS THAT INDIAN GOVERNMENT IS DEPENDANT ON NOKIA IN COMING YEARS. NOKIA - ALL AROUND YOU.
    12 Feb, 02:40 PM Reply Like
  • Andreas Hopf
    , contributor
    Comments (8577) | Send Message
     
    timoeranko, your caps lock key is still stuck.
    12 Feb, 03:31 PM Reply Like
  • Timothy Bryan
    , contributor
    Comments (757) | Send Message
     
    and Risto still sucks...
    12 Feb, 04:46 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7979) | Send Message
     
    RISTO, RISTO, HE'S THE MAN, IF HE CAN'T DO IT --NO ONE CAN!
    -
    Thanks Timoe. Always nice for a light hearted laugh.
    12 Feb, 06:28 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7979) | Send Message
     
    Diablo! You are pushing it man. You're really pushing it.
    -
    RISTO!
    12 Feb, 06:29 PM Reply Like
  • Timothy Bryan
    , contributor
    Comments (757) | Send Message
     
    LOL DWD
    12 Feb, 07:06 PM Reply Like
  • Kamminga
    , contributor
    Comments (186) | Send Message
     
    Note that Nokia isn't exactly rolling over. I guess the Chair is trying to save 30,000 jobs. It's easy to turn this self-contained plant into a separate company, take it out of the MSFT deal, and let it continue making Nokia mobiles as planned anyway. If it is profitable. it will survive and Nokia will benefit. If it is not, it will surely be "re-structured". The sell-off yet again was in Helsinki, not New York, same as happened on 23rd Jan. Helsinki starts high and finishes low almost every day. This bit of news is probably not good for those desperate for that "special dividend". If Nokia is to keep this plant then they'll need the strongest possible balance sheet. This is not a big deal, just a nuisance, and the Indian people will suffer. Note today's chart is nearly flat and volume low. A day trader's nightmare....
    12 Feb, 02:58 PM Reply Like
  • ewmpsi
    , contributor
    Comments (1524) | Send Message
     
    Now…now, what’s this fighting about, there are plenty of “descriptors” to go around, we don’t have to quibble over one or two ;-)
    --
    Just wait, when the deal closes, the pundits will drop the word “stalled” and refer to the deal as “hamstrung” by the Chennai plant and India tax issues. Then we’ll have a whole series of articles about the aftermath of a “diluted” deal that still leave “overhang” for Nokia.
    --
    All the while, the stock dips and the accumulation of shares continues, I’m not saying Nokia’s a buy I’m saying Nokia is doing what it has done several times since $1.63 (if I remember correctly) bottom. Each time we run out of new news, we pause then drag out old news. We even reenact it like an old civil war, if anything has stalled it’s the bullish hyperbole.
    12 Feb, 03:12 PM Reply Like
  • La Rue
    , contributor
    Comments (751) | Send Message
     
    I've had enough ! Off to Strictly Sail in Miami tomorrow for the weekend. Catamaran window shopping. R and R is in order. And yes I'm taking my RED 920 to South Beach : )
    12 Feb, 05:25 PM Reply Like
  • Andreas Hopf
    , contributor
    Comments (8577) | Send Message
     
    With Nokia's motley crew of REMFs running the show, some R&R is well in order. Sent from my WHITE Lumia 920 (sans VPN).
    12 Feb, 05:45 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7979) | Send Message
     
    La Rue,

     

    Did you pick up the cigarette disguise box for the 920 camera?
    12 Feb, 06:35 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7979) | Send Message
     
    AH,
    Look man, Microsoft knows best. You don't need no stinking VPN, nor privacy.
    12 Feb, 06:36 PM Reply Like
  • La Rue
    , contributor
    Comments (751) | Send Message
     
    AH, your VPN is on the way. Just like the MSFT check. :)

     

    dwdallam, no I haven't but I checked them out and will consider one. Thanks for the tip.
    12 Feb, 08:04 PM Reply Like
  • jamesingram32
    , contributor
    Comments (615) | Send Message
     
    well, I am not upgrading my 610, until NOK gives up some profit to pay for it...
    14 Feb, 11:17 AM Reply Like
  • Timothy Bryan
    , contributor
    Comments (757) | Send Message
     
    lol james
    14 Feb, 11:19 AM Reply Like
  • Andreas Hopf
    , contributor
    Comments (8577) | Send Message
     
    Continuing using a Lumia 610 shows a valiant and brave attitude. But I thought that you were long NOK and racked up a huge profit after 3rd September, too? You could treat yourself to a Lumia 920 retail palette (20 units in 5 colours).
    14 Feb, 12:26 PM Reply Like
  • jamesingram32
    , contributor
    Comments (615) | Send Message
     
    i did make money on sept 3rd, this is true. contract is up this Christmas, and I shall upgrade a little, but my DNA is not to spend at all. Hill farmer family, fear of the workhouse, memories of the famine etc etc well, those are my excuses... maybe a 520!
    I'm open to persuasion though. :)
    14 Feb, 08:30 PM Reply Like
  • Andreas Hopf
    , contributor
    Comments (8577) | Send Message
     
    You can get a Lumia 920 without contract for nearly nowt these days, only €279, having disappeared from nearly all stores here.
    15 Feb, 03:26 AM Reply Like
  • mKiwi
    , contributor
    Comments (651) | Send Message
     
    Perhaps the Indian's want to Nationalise the plant and own it themselves thereby securing 30,000 jobs. As you say it's only worth several hundred million so perhaps the Indians want the plant in lieu of any perceived outstanding tax obligations.
    Then they can produce home brand feature phones in a state of the art Nokia factory.
    12 Feb, 05:39 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (7979) | Send Message
     
    Kiwi,
    Or Nokia could simply say, sorry, we're closing the plant and we still own it. We're just gonna grow tulips around it for a while.
    12 Feb, 06:37 PM Reply Like
  • mKiwi
    , contributor
    Comments (651) | Send Message
     
    DW

     

    With 30,000 jobs on the line, I don't think the Indians will allow Nokia to close the plant or remove machinery until the "tax issue" is cleared up.
    12 Feb, 07:28 PM Reply Like
  • jjmc2001
    , contributor
    Comments (1291) | Send Message
     
    After reviewing all of the various disclosure documents produced by NOK it appears that the whole tax issue in India would not result in material financial hardship. As I understand at the heart of the dispute is the various transfer pricing allocations that NOK has done with the Indian subsidiary. Wouldn't the ultimate outcome be a positive adjustment in already paid Finnish taxes?
    The main reason this is an issue is the pending MSFT deal. I am not well informed as to business practices in India but I have heard snide remarks about corruption and bribery. If this type of problem were to occur in a more structured business climate (for example, Chicago, Il or Mexico City) a local law firm would be hired and after substantial cash changed hands the authorities would resolve the problem and move forward. End of story. In the meantime we are left gnawing at the carcass of the once proud NOK.
    12 Feb, 07:20 PM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1948) | Send Message
     
    There was an article last week in Finnish Kauppalehti on the double taxation issue:
    http://seekingalpha.co...

     

    Unfair as it sounds, Nokia might have to pay taxes twice even though there is a tax treaty in place between Finland and India.

     

    Namely the Finnish international tax experts interviewed for the article said that if Nokia India is forced by the Indians to pay taxes that the Finnish tax man deems to be collectible in Finland (and has already collected in Finland in this case), or if the Indian tax man collects taxes that it is not entitled to collect, the Finnish tax man will not refund Nokia. In other words the interpretation of the law is that for Nokia to avoid double taxation Indian and Finnish tax authorities both have to agree on who gets to tax certain income. If it turns out that the tax authorities decide to not agree, Nokia is left in a limbo...
    12 Feb, 08:39 PM Reply Like
  • anil92691
    , contributor
    Comments (391) | Send Message
     
    The plant in Chennai would be a wholly owned subsidiary of Nokia. Technically an independent company owned by Nokia. The issue is that this facility needs to pay its taxes. The Nokia Mobile Division sale to Microsoft is a done deal whether China approves it or not or whether this tax issue is resolved.

     

    There are several ways that this facility can be transferred to Microsoft while the dispute is resolved. A Microsoft shell company can lease 100% of the facility along with its operations from the Indian facility. Microsoft only cares about the continuity of manufacture of the phones.

     

    As for the taxes, Nokia is on the hook. I don't expect the Supreme Court to reverse a decision. It is a very independent group and is not pressured by the Indian Government but then corruption is a normal way of life all the way to senior judges and the Indian Prime Minister. The Indian Income Tax department is good at the numbers and has recently gone after several foreign companies that were using tax loopholes to their advantage. So I expect Nokia will pay in some form. The Indian Income Tax department will prevent the Escrow from closing as that is the only leverage it has.

     

    The Tax Laws in India are fairly mature and clear. Recently several companies were called for avoiding taxes by shifting profits offshore. This is a problem in the USA too. Although done legally the US Govt does not like the offshore accounts of MSFT, APPL, GOOG......
    12 Feb, 11:23 PM Reply Like
  • Timothy Bryan
    , contributor
    Comments (757) | Send Message
     
    This is quite possibly the most profoundly stupid drivel I have ever read on SA...
    12 Feb, 11:43 PM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1948) | Send Message
     
    Nokia press release:

     

    Nokia comments on the tax dispute in India; has no effect on the timing or the material terms of the planned sale of the Devices & Services business to Microsoft

     

    http://nokia.ly/1gAbeTT
    14 Feb, 12:13 PM Reply Like
  • Freddo70
    , contributor
    Comments (25) | Send Message
     
    Amen...
    15 Feb, 08:59 AM Reply Like
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