India orders audit of Nokia, could delay sale of devices and services division

Last week, Nokia announced that it would be delaying the sale of its devices and services division to Microsoft until April 2014. While this was only a delay of a month, Nokia could see further delays due to its continued legal battle in India. India has accused Nokia of trying to evade paying $545 million dollars in taxes. India has also requested that Nokia pay for future liabilities that could total $3.4 billion dollars with an upfront payment of $500 million.

In order to create clarity, India has ordered a special audit, that due to its complexity, could take up to six months to complete. While Nokia has confirmed that it received orders for the audit and would comply with the authorities, it has declined to say if the audit would affect the deal, only to reiterate a recent statement that its tax disputes in India wouldn't affect the closing or terms of the transaction. According to the Wall Street Journal, this audit could cause issues for the Nokia / Microsoft deal which would result in further delays surpassing the April deadline. Nokia has challenged the claims and will dispute them in court starting April 1st

Source: Wall Street JournalImage via Nokia

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35 Comments

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sanke1 said,
Instead, it would be better to pay their dues and carry on with the operations.
Lets be a touch more accurate and call it a Ransom rather than "dues"

This is something where Microsoft will have to pitch in if it needs to close this deal at the earliest. This can come to hurt both of them real bad if it really goes to extend to six months or so, as mentioned in the article.

"India has also requested that Nokia pay for future liabilities that could total $3.4 billion dollars with an upfront payment of $500 million"

$4billion in total India is requested

I wonder if this has to do with getting around paying local taxes (as many large companies tend to allegedly do) might not amount to much in that case.

Steven P. said,
I wonder if this has to do with getting around paying local taxes (as many large companies tend to allegedly do) might not amount to much in that case.

Yep true, was reading something here in Oz, about Apple and their TAX's moving off shore

And I can see why India wants to delay things. Companies do a lot to skirt paying taxes and to use the system to their advantage. Glad someone isnt standing for it.

techbeck said,
And I can see why India wants to delay things. Companies do a lot to skirt paying taxes and to use the system to their advantage. Glad someone isnt standing for it.

Unfortunately they'll get away with it though, I read here ages ago that Facebook has an empty office in London somewhere that represents the UK side of their business and as a result pay very little taxes :s

techbeck said,
And I can see why India wants to delay things. Companies do a lot to skirt paying taxes and to use the system to their advantage. Glad someone isnt standing for it.
Let me guess, you've never done anything to avoid paying taxes.

Seriously, people's demonizing of companies for doing what they themselves do every day is silly.

MrHumpty said,
Let me guess, you've never done anything to avoid paying taxes.

If I have to pay taxes, I pay them. Easier/cheaper to pay now than getting caught and having to pay a lot more later. I forgot to pay $50 one year on my state taxes. Honest mistake and I had to pay much more later on.

And my missing a tax payment pales in comparison to a company who fails to pay a multimillion dollar tax payment.

Steven P. said,

Unfortunately they'll get away with it though, I read here ages ago that Facebook has an empty office in London somewhere that represents the UK side of their business and as a result pay very little taxes :s

Countries need to close those loopholes.

techbeck said,
If I have to pay taxes, I pay them. Easier/cheaper to pay now than getting caught and having to pay a lot more later.
So you never deduct anything? You do realize that's generally what companies do. They legally deduct or organize in a way that limits their tax exposure.

Also, if you are in the US nearly every state has a "use tax." Whereby if you buy something out of state that isn't taxed you are supposed to pay that tax yearly to the state.

And my missing a tax payment pales in comparison to a company who fails to pay a multimillion dollar tax payment.
Irrelevant. Taxes are based off of revenue. Your income is much lower than a huge company. The principle is still the same.

MrHumpty said,
So you never deduct anything? You do realize that's generally what companies do. They legally deduct or organize in a way that limits their tax exposure.

Occasionally. But there is a difference between using the system as it is intended, and abusing the system. Which is what these companies are doing.

techbeck said,

Occasionally. But there is a difference between using the system as it is intended, and abusing the system. Which is what these companies are doing.

There was supposedly some kind of tax agreement between Finland and Indie that resulted in Nokia not having to pay the taxes that India is claiming they now owe. At least, that was part of Nokia's defense.

I don't know if anyone knows all the facts or even cares to know them beyond to pick which company to tear apart, but this situation looks a bit more gray then some seem to think.


As far as evil companies avoiding taxation, well that's another gray area subject. I suppose you can side with government and assume they are all evil companies, or you can assume evil governments and side with the companies. In the end, both groups are run by humans that can make mistakes or purposely doing something corrupt.

Taxation has been used by corrupt governments before in a way that is punishing more than simply 'paying the bills' and corrupt company leaders have outright cheated in order to keep more money for themselves.

I'm not sure if I want to hate companies that try to avoid taxes since I myself like to avoid taxes where possible. If they do something illegal, well then they have to accept punishment. If they are using a loophole or just understand the laws enough to avoid taxation, well I can't fault them. If you hate what they are doing, then get the laws changed and close the loopholes.

MrHumpty said,
So you never deduct anything? You do realize that's generally what companies do. They legally deduct or organize in a way that limits their tax exposure.

Yes, but I don't open shell companies in tax havens or hold money in offshore accounts for deductions.

MrHumpty said,

Irrelevant. Taxes are based off of revenue. Your income is much lower than a huge company. The principle is still the same.

Irrelevant. Size of income has got nothing to do with abusing the system.

Oh no, Facebook have very nice offices in the centre of London, they're not empty. Or not last time I was there anyway. ;)

They do have some tax loophole going on though, can't remember the details now.

trooper11 said,
snip

I dont hate any company or think they are evil. Hate, for how small a word it is, is a strong word. I dislike many things companies do tho. This is one of them.

recursive said,
Yes, but I don't open shell companies in tax havens or hold money in offshore accounts for deductions.
If your tax bill was high enough, trust me you'll start looking at all sorts of creative ways to keep your money. I hope you don't have a Roth, 401(k) or any other financial vehicle which exists entirely to get preferential tax treatment.

Irrelevant. Size of income has got nothing to do with abusing the system.
It is not abusing the system. It is using every option available within the system. Or what I used to call in gaming "Creative Use of Game Mechanics." Or put more simply, "Don't hate the player, hate the game."

techbeck said,
I dont hate any company or think they are evil. Hate, for how small a word it is, is a strong word. I dislike many things companies do tho. This is one of them.
However you choose to describe your view of companies large or small... you seem to be very biased in favor of the virtue of government taxes vs the virtue of corporations keeping their own revenue.

Hurry with the deal already
WP users/Fans don't Care about Nokia now, we just want the Deal to go through and so we can see what MS are going to bring us :D

Shadowzz said,
Nothing to do with taxes. Just butt-hurt people crying to see Nokia move to Microsoft.

More like Google paying off officials to delay the Deal

Jason Stillion said,
When your an international based company, your also under / have to comply said countries and laws and polices.
Yes, because it's a law and a policy it is legitimate... companies would never use those precious things to
screw with their competitors.

Statists gonna state.

Shadowzz said,
Nothing to do with taxes. Just butt-hurt people crying to see Nokia move to Microsoft.

No, it's just India trying to get money from rich american companies, again. A lot of countries have been doing this with Google, Microsoft, and Apple lately.

Rosyna said,

No, it's just India trying to get money from rich american companies, again. A lot of countries have been doing this with Google, Microsoft, and Apple lately.


Union Carbide and Bhopal....

Rosyna said,

No, it's just India trying to get money from rich american companies, again. A lot of countries have been doing this with Google, Microsoft, and Apple lately.

Yeah like India doesnt have their own "Rich Companies" :rolleyes:

Shadowzz said,
Nothing to do with taxes. Just butt-hurt people crying to see Nokia move to Microsoft.

From what I've read, It appears that Nokia sold its phones inside India despite declaring to the government that they were to be exported. Nokia didn't pay any taxes on those misdeclared phones which were sold in India, hence the tax bill.

simplezz said,

From what I've read, It appears that Nokia sold its phones inside India despite declaring to the government that they were to be exported. Nokia didn't pay any taxes on those misdeclared phones which were sold in India, hence the tax bill.

You read wrong. These are backtaxes on revenue made from apps sold in India using Nokia phones, which Nokia argues it doesn't have to pay because of an deal between India and Finland while the Indian govermnent claims that terms of the deal were changed so the taxes now apply.