Nokia raises tax issue with Com Min; will stay in India

Finnish mobile phone maker Nokia today raised the Rs 2,080 crore tax dispute with Commerce Minister Anand Sharma, seeking his help for an early resolution of the matter.

"He (Nokia Executive Vice President for Devices and Services Stephen Elop) met the Minister and asked him to resolve the tax issue. The Minister has suggested he should approach the ministry concerned, which is the Finance Ministry," a source said.

Nokia India has been slapped with a tax demand notice of Rs 2,080 crore for the five years beginning 2006-07. The demand concerns the tax treatment of payments made for software supplied by Nokia's parent company for devices produced in India. Indian tax authorities consider the payments as royalties that are subject to taxation in India.

While Elop refused to say if he raised the tax demand with Sharma, sources said the issue figured during the talks. Elop said, "The principal reason here is to reassure and provide complete support for our great efforts here in India. I have had the opportunity to meet the minister just a few minutes ago."

US software giant Microsoft last week agreed to acquire a major part of Nokia's devices and services business and license its patents for about USD 7.2 billion. Nokia will keep its telecom network equipment arm NSN, mapping and location services, its CTO office and its patent portfolio.

Elop said he was in Chennai with the Nokia factory team earlier today and was meeting the team in New Delhi as well. "As you know that there are changes under way at Nokia that we are very excited about. What we are talking about here today is our continued commitment to all the work that we are doing in India," Elop said.

Nokia had written a letter to the Commerce Ministry in June, threatening to exit from India following the non-refund of value added tax by the Tamil Nadu government and the Rs 2,080 crore tax dispute.