Nokia will have to pay total tax liability: Finance Ministry

Nokia will have to pay total tax liability: Finance Ministry

Finnish handset maker Nokia will have to clear its total tax liability, a senior finance ministry official said.

Nokia recently offered to pay around Rs 2,250 crore to income tax (I-T) department towards its tax liability estimated at around Rs 6,500 crore. But, the I-T department rejected the offer, saying it was unacceptable.

A few days back, Finland's Foreign Minister Erkki Tuomioja also urged the Indian government to resolve the tax dispute before 12th of December so that Nokia's Indian assets could also be transferred to Microsoft as per the two companies' US$7.2 billion deal.

Tuomioja also cautioned that unresolved deal could lead to closing down of Nokia's Chennai plant, which employs nearly 8,000 people and has around 30,000 sub-contractors.

But, the Indian finance ministry remained unfazed by threats of closure of the Chennai plant. When asked to respond to the Tuomioja's recent statement, a top Finance Ministry official said, "Nokia will have to pay total tax liability."

The Chennai plant, which is one of Nokia's biggest manufacturing facilities, may be excluded from the Nokia-Microsoft deal if the company's assets are not released by 12th of December.

Nokia's Indian subsidiary was slapped with a tax demand notice for violating withholding tax rules since 2006 while making royalty payments to its Finland-based parent company.

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