A timeline of Nokia's tax problems in India

Mobile telecom handset maker Nokia's Chennai plant will suspend manufacturing activities from today. 

 

The plant was excluded from Nokia’s deal with Microsoft, which acquired its devices division earlier this year, as it was frozen by the income tax department for non-payment of taxes to the tune of Rs 21,000 crore. Following this, the state government too slapped a sales tax notice of Rs 24,00 crore on the company.

 

Here is a timeline of Nokia's tax issues:

8-Jan-13	India’s Income Tax department inspects the Chennai factory
21-Mar-13	The Income Tax Department issues Rs 2,080 crore (€250m) tax demand (later rectified to Rs 2,649 crore) on Nokia India, alleging that it has failed to withhold tax on the payment made to its parent as ‘royalty for the software’ used in its mobile phones since 2006
17-Apr-13	The Delhi High court asks the Income Tax Department to re-examine its claim against Nokia and not to take any further coercive action. The court sends the matter back to the I-T Commissioner for fresh examination, and asks him to decide the matter before 31 May 2013
8-May-13	At Nokia India’s request, Finland invokes the Mutual Agreement Procedure (‘MAP’) under the DTAA, asking the competent authorities in India to seek an agreement on the application of the DTAA
31-May-13	The Commissioner of Income Tax (Appeals) dismisses Nokia India’s appeal
Jul-13	Nokia India agrees to pay a ‘deposit’ of Rs 700 crore towards ‘stay of demand’ raised by the Income Tax Department and prevent the full amount of the claim by the DDIT becoming payable while it awaits a hearing before appellate authorities
3-Sep-13	Nokia announces that it intends to sell its Devices & Services division to Microsoft
25-Sep-13	India’s Income Tax Department freezes all assets of Nokia India
9-Dec-13	Nokia India offers that if the asset freeze is lifted, so that the sale to Microsoft can proceed, it will transfer all proceeds to an escrow account containing a minimum of Rs 2,250 crore, as security for the tax claim
12-Dec-13	The Delhi High Court agrees to unfreeze Nokia India’s assets in return for the deposit of Rs 2,250 crore into an escrow account
	As conditions for doing so, the Court requires that Nokia provide:
	1) a parent company undertaking amounting to Rs 3,500 crore on behalf of Nokia India
	2) unconditional undertaking on its own behalf and commitment to pay any tax demands before exhausting all available legal remedies
5-Feb-14	The Delhi High Court amends its December 12, 2013 ruling, requiring Nokia to commit to pay taxes for which it is not legally liable and waive its international rights to defend itself
12-Feb-14	Nokia India announces it will appeal the decision of the Delhi High Court to the Indian Supreme Court
Feb-14	Nokia India receives a Rs 2,400 crore (€300m) sales tax bill from tax authorities in Tamil Nadu, who claim that handsets manufactured in Chennai during FY 09/10- 11/12 were not exported but were sold in Tamil Nadu
14-Mar-14	India’s Supreme Court dismisses Nokia India’s asset freeze appeal, allowing the Delhi High Court order to stay in force
21-Apr-14	Nokia confirms that the Chennai factory will be excluded from the Microsoft deal, due to the asset freeze imposed by the Income Tax Department
25-Apr-14	Nokia globally completes the sale of substantially all of its Devices & Services business to Microsoft.
29-Apr-14	The Madras High Court orders the Tamil Nadu tax authorities to reconsider their sales tax claim against Nokia India. The Court asks Nokia to provide Rs 240 crore, or 10% of the disputed tax demand, as a deposit within eight weeks as a precondition for the two sides to discuss the claims
14-May-14	Nokia announces that it has sent a letter to Indian Prime Minister Dr Manmohan Singh under the Finland-India Bilateral Investment Treaty (BIT) seeking amicable resolution of the tax dispute
6-Oct-14	After Microsoft ends its transitional services agreement (TSA) agreement (for Sriperumbdur facility), Nokia announcs from November 1 operations will be suspended
10/31/2014	The last working day of the Chennai factory