Nokia is yet to resolve its tax dispute with the Indian government which is hindering the transfer of its Chennai factory to Microsoft, Risto Siilasmaa Nokia’s chairman and interim chief executive confirmed to the Wall Street Journal.
As a part of the $7 billion acquisition deal between Nokia and Microsoft, the Finnish company’s Indian factory has to be transferred to Microsoft within 45 days from now. However, Nokia is still under the Indian government’s hammer over the tax issue which includes a Euro 250 million tax claim.
If the issue does not resolved in this period, Nokia will have to exclude the transfer of its Indian factory to Microsoft and would instead work as a contract manufacturer of mobile phones for a transitional period.
“As far as the transaction, if we aren’t allowed to transfer, we will have a factory, but we won’t have a business. And if we don’t have a business, we can’t manufacture anything in the factory,” Siilasmaa said after a meeting with Anand Sharma, India’s Trade Minister. “And that would be detrimental to our employees and we care deep for our employees. So we are trying to explore all possible means of finding a solution to this issue,” he added.
Earlier it was reported that Nokia will only be allowed to transfer this property to Microsoft after it pays Rs 2,250 crore ($367.17 million) to the government in an escrow account in lieu of the permissions. However, Indian tax authorities have still not come to a final verdict on this issue. However, if the company loses the case, it might as well be required to pay a fine of $3.4 billion for non-payment of tax and interest.