Nokia Takeover In Jeopardy Due To Alleged $3.4B Tax Bill In India

New submitter Snotboble_ writes "The government of India apparently thinks Nokia owes a lot of taxes. They originally told Nokia that the company owed around $340 million, but now reports suggest it could be an order of magnitude higher. Such a large liability would have consequences for Nokia's sale of its handset division to Microsoft. From the article: 'Nokia Corp.'s tax troubles in India worsened Tuesday as local authorities ratcheted up the amount of tax they say the Finnish company may owe to more than $3 billion. Nokia's battle to defend itself from the claims—one of the latest surprise tax bills slapped on big foreign companies in India—could affect its plans to sell its handset division to Microsoft Corp. as the phone company's factory in India is part of the $7 billion deal.'"

Comments

corruption

[BurgEnder]

nothing like a good 'ol shakedown by a government's tax authority

Re:corruption

[tftp]

You don't need to go farther than California to find an example of the government blackmailing people for "back taxes". Fortunately, this time, the tax-hungry government was stopped in its tracks. However who in India will oppose taxing of a faraway, rich company?

Re:corruption

[gl4ss]

dodging taxes? 3.4 billion doesn't seem like that really. it sounds more like changing the tax to be 10x of what they were told it would be when they started doing business locally.

the thing is, they had no way on earth knowing the taxes beforehand. nobody has. so how are you supposed to price the hardware beforehand? even if you ask one state government then another sub-state government is going to claim otherwise since they want the money too.

it's just another example why big industry is staying officially out of india... and it's hurting india. another option for a company is to bribe everyone continously.

heck, ikea had to fight over the right to sell meatballs... good news for China, Korea, Taiwan & all though since why bother with spooling up factories in India when they can't make up their minds about the rules? unstability of rules is number one reason why developing countries have hard time attracting serious investment... so the jobs they then get are something that doesn't need long term investment(like hand assembly.).

Nokia's getting what it deserved.

[bstarrfield]

You want cheap labor?

You want little environmental regulation?

You want to hide from taxes in your home country?

Then build in the developing world. But don't cry when the developing world's lack of rules and regulations bite you in the ass with sudden "fees", "taxes", and other sundry costs. You chose to leave your home country to enhance shareholder profits. Surprise, the rest of the world doesn't have to operate according to your shareholder's profit motive.

Re:Why wait until now?

[saleenS281]

The same way the debt can increase from $300 million to $3 billion overnight. They think they can get it, and they're corrupt as hell.

Re:Announce shutdown of factory ...

[Rich0]

Ok, so you have $10k in a bank account in Peru. You want to transfer the money to your account in the US. The bank says that before you're allowed to move the money you have to pay a $500 tax to the government. So, you propose to just tell the bank to close your account and keep the money?

Sure, Nokia could abandon a factory to save on a much smaller tax bill. They could even burn their own factory to the ground to prove a point. However, it isn't exactly a great business decision.

BTW, this is one of the reasons why companies didn't move all their stuff overseas a generation ago. It wasn't like the pay disparity was any less back then. If you want luxuries like reliable electricity, no hostage taking, no need to bribe the local politician, and no government shakedowns, well, sometimes you have to pay your workers a bit more to go along with that...