Finnish mobility devices company Nokia's tax muddle has deepened. The
vendor is apparently running out of options, whilst it's yet to embark
on full-fledged legal recourse. Beset by double whammy, Nokia has
already sought intervention from the Ministry of Finance of Finland, but
with reluctance from the Indian authorities, it all went in vain.
As soon as Nokia's plea was rejected by I-T appellate, the accounting
regulator ICAI has sought details to probe alleged accounts and audit
malpractice. The Indian authorities - as was in British telecom major
Vodafone's Rs. 11,200 crore tax liability case - are in no mood to alter
nitty-gritty, although reconciliation could however be a way forward to
resolve such a vex issue.
The I-T auditors found prima facie default wherein Nokia is liable to
pay 10 per cent (under TDS) on royalty payments against software
shipments. The I-T commissioner appellate has already dismissed Nokia's
appeal against Rs. 2,080-crore demand notice since the setting up of its
Sriperumbudur (near Chennai) facility in 2006. The government is
aggressively aiming at fiscal consolidation, and is not willing to give
up.
Counsellor (Economic & Commercial) at Ministry for Foreign
Affairs of Finland, Juha Pyykkö, has confirmed that upon an application
by Nokia, the Ministry of Finance of Finland has approached the Ministry
of Finance of India to launch the Mutual Agreement Procedure under the
bilateral Double Taxation Avoidance Agreement between Finland and India.
A Nokia spokesperson in a statement to CIOL, however, said that the
mutual agreement procedure under the India-Finland tax treaty has indeed
been invoked. "Given the fact that the tax case remains open, the
company looks forward to a prompt and just resolution to the matter,"
the statement added.
The devices major is expected to file a plea with the Delhi High
Court, although it's unlikely to get any respite through legal
intercession. This may, however, due to thorough audit by the tax
authorities. Nokia has been accused of leveraging software to the tune
of Rs. 25,000 crore without tax liability for its burgeoning devices
market in India.