Nokia sale of handset unit delayed; faces new India tax dispute

Nokia's (NOK) sale of its handset business to Microsoft (MSFT) will be completed in April rather than at the end of this month, as initially expected.

The postponement is due to the deal not yet receiving authorization from a number of regulators, including in China.

The transaction has already received approval in the U.S. and Europe.

Meanwhile, Nokia is facing another tax claim in India, this time from the southern state of Tamil Nadu, which says it is owed €300M ($417M) on unpaid taxes on sales of phones made at the company's factory in Chennai. India's government says Nokia owes €250M in a separate tax dispute.

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Comments (10)
  • joshvegas
    , contributor
    Comments (524) | Send Message
    haha, indians are funny:) who is next?
    Otherwise great to hear that deal will be closed in April.
    24 Mar 2014, 07:32 AM Reply Like
  • Ruffdog
    , contributor
    Comments (3675) | Send Message
    Sounds like the Obama adminstration and US banks.
    24 Mar 2014, 10:35 AM Reply Like
  • Videnak
    , contributor
    Comments (499) | Send Message
    I see this as a punishment for all companies, who moved production to Asia. Taking these tax bills into consideration, it would have been cheaper to produce the handsets in Romania instead. Too bad that chips and other parts are also made in Asia....
    24 Mar 2014, 07:39 AM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (2146) | Send Message
    Notably from Nokia's press releases:


    "...Nokia reiterates that ongoing tax proceedings in India have no bearing on the timing of the closing or the material deal terms of the anticipated transaction between Nokia and Microsoft..."


    "...Nokia has today filed a writ to the Madras High Court to contest a claim from the Tamil Nadu tax department, which has moved to assess sales tax on the export of devices from the company's Chennai facility.


    Nokia considers the claim to be completely without merit and counter to domestic tax laws. In India, exports are by law exempt from tax, and Nokia has proved consistently that devices produced at Chennai are exported abroad. Indeed, the company has been regularly assessed and audited by the tax authorities since 2006 without incident, and it has also won numerous export awards from governmental organisations.


    It is absurd that the Tamil Nadu tax authority is now claiming that devices made in Chennai were not exported and were instead sold domestically in India. We contend that this allegation has no basis in reality whatsoever; it could easily be rebuffed by a check of documentation provided to various governmental departments including Customs.


    Nokia will defend itself vigorously in this matter..."


    In this new tax case Nokia is even supported by local trade unions:


    "Mobile phone industry body backs Nokia"


    "...This is unconstitutional and total violation of the due process of law..."
    24 Mar 2014, 07:55 AM Reply Like
  • La Rue
    , contributor
    Comments (900) | Send Message
    Idiotic Indians will get what's coming to them.
    24 Mar 2014, 08:06 AM Reply Like
  • DWD Investing
    , contributor
    Comments (13376) | Send Message
    Not the Indians, its the "Asian authorities" that locked it up. They should just tell them too bad, the deal is now closed, and if you don't like it, sue Microsoft and us and see how far that gets you.
    24 Mar 2014, 01:26 PM Reply Like
  • sidiji
    , contributor
    Comments (271) | Send Message
    Major difference between the Chinese and Indians....China really does seem to have their people's best interest at heart.


    I have been very impressed with China's professionalism so far, they have learned all the best aspects of western civilization it seems.


    Indians are still stuck with their banana republic short term corrupt mentality; but that is not true of Chinese leadership, who from all appearance, is trying to do the right thing.


    Adam Smith asked this question long ago, why are some nations rich and others forever poor and backwards. The answer is enlightened self-interest and ability of the government to have the long view. There is no stopping China now. India is going back to 1950's level of economic development, sad.
    8 Apr 2014, 08:50 AM Reply Like
  • ATX
    , contributor
    Comments (129) | Send Message
    Looks like people in India will lose more jobs than that 8,000 from the factory, foreign companies won't be building factories there, what the government do will cause suffering to their own citizens.
    24 Mar 2014, 01:18 PM Reply Like
  • DWD Investing
    , contributor
    Comments (13376) | Send Message
    And, now this! But MS and Jokia "confident they will close in March, er April, if "Asian" (anymore general there guys?) authorities see fit, er, maybe, sort of, if there is no tax problem, based on some forward looking flubber."
    Look, this deal probably will not close for months, and if it does, it will leave Nokia in worse shape than if MS pulled the plug and gave Nokia the withdrawal money. Asian "authorities" are no better than the Indian tax masters here. They both want money, one from extortion by taxes that are made up, the other by limiting patent licenses that are legal, but will probably go up after the sale, just like they have for HTC, and which they will for Samsung. In both cases the business model is criminal.
    This sale is botched, and botched badly. After the tax authorities and Asian authorities have their day in the park, it won't even be worth having a deal in the first place. Better for Nokia to simply announce--"There is now no deal, and we are shutting down all D&S in India, which means the "tax dispute" is now over for eternity. We will also shut down all D&S manufacturing and exit the D&S market, while pursuing or patent licenses much more vigorously."
    Translation: OK Asian and Indian authorities, you won the battle, but you will lose the war. We will come knocking for our patent licenses, and we pursue those patent infringement law suits to the fullest extent of law.
    24 Mar 2014, 01:23 PM Reply Like
  • sidiji
    , contributor
    Comments (271) | Send Message
    My read is, they're waiting on confirmation from china...that sounds like they already have informal agreement in hinted at by nokia's India counsel in testimony before the Indian SC a week ago.


    Just paperwork people. We could be a couple weeks away from close.


    Very encouraged that they say the indian situation will NOT materially affect the 'terms' of the closing...very possibly Nokia will get the same amount for the sale despite the lack of the indian plant.
    24 Mar 2014, 03:01 PM Reply Like
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