Smartphone vendor Nokia received a new $414 million sales tax claim from the Tamil Nadu tax authority in India. It considered the claim absurd because it exports all devices from its Chennai plant.
Nokia, which is already facing uncertain conditions in completing the approx. $7.5 billion Microsoft transaction on account of other tax claims, considers the new claim to be completely without merit and counter to domestic tax laws.
The $414 million sales tax claim will not have any impact on its deal with Microsoft, said Nokia.
In India, exports are by law exempt from tax, and Nokia proved consistently that devices produced at Chennai are exported abroad. The company has been assessed and audited by the Indian salex tax authorities since 2006 without incident. This apart, Nokia India won a number of export awards from governmental organizations.
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 said.
Nokia will defend itself vigorously in this matter.
Meanwhile, Nokia told Reuters it had filed a writ to the Madras High Court to protest Tamil Nadu authority that claimed that handsets produced in the company’s Chennai plant were not exported but instead sold in India.
The Tamil Nadu tax department has moved to assess sales tax on the export of devices from the company’s Chennai facility.
India’s Supreme Court last week in a tax dispute ordered Nokia to give $571 million guarantee before it transfers the Chennai plant to Microsoft.
