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India asks Nokia for £340 million in tax

Handset maker could be set for bill shock

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India has added itself to the growing list of nations putting extra pressure on global tech titans over tax-related matters, after reportedly tapping Nokia on the shoulder regarding irregularities which could total 30bn Rs (£340m).

A spokesman for the Finnish phone maker told The Hindu it was “visited” by tax officials at the facility in Sriperumbudur, an industrial zone near Chennai, and was “fully co-operating to ensure they get the necessary information to help in their inquiry”.

Nokia has had a presence in India since 1995 and the Sriperumbudur is one of its largest, employing over 8,000 staff and churning out many millions of handsets since its opening in 2006.

The firm will be hoping for a swift resolution of any tax issues, given that its performance in India and other emerging markets will be important to the company’s future success. Although Nokia's 14-year reign as the world’s largest handset maker ended last year and the company has struggled financially, things are looking a lot better in these up-and-coming markets.

Device sales in India are forecast by Gartner to grow at over 13 per cent in 2013 to reach 251 million units, and as of Q2 2012 – when fresh data was last made available – Nokia led the mobile handset market there with a 22 per cent share, according to local analyst CMR.

The possible unpaid tax bill of £340m was touted by India’s Economic Times , which spoke to an anonymous “IT official” with the government.

India's tax authorities have been clamping down on foreign companies based in the region.

Vodafone’s six-year-long battle with the Indian government took another turn last week after it was handed a bill in excess of £2.2bn relating to its acquisition of Hutchison Whampoa’s Indian business in 2007.

Google has also been on the receiving end, hit with a £8.7m fine for various accounting violations.

Nokia couldn’t immediately be reached for comment, but a spokesman gave The Hindu the following statement:

As a global company, Nokia consistently fields a large and steady number of tax queries, audits and assessments. Nokia’s commitment to being a good corporate citizen is firm, and unwavering. We always observe applicable laws and rulings in the countries where we operate. This has been a core principle of our operations in India, where Nokia has been present since 1995.

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