Nokia said that an ongoing dispute with India’s tax authorities will not impact the sale of the bulk of its Devices & Services unit to Microsoft, which is still expected to close in the current quarter.
According to reports late last week, Nokia has appealed to India’s Supreme Court after the authorities in Delhi imposed new conditions which have impacted the transfer of a manufacturing site in Chennai to Microsoft.
This follows a tax dispute which saw the factory seized, although it was released in December 2013 in return for Nokia depositing cash in an escrow account.
Reuters reports that the Delhi High Court has now said that Nokia must pay deposits on local authority tax claims as they are made – and before the company has had the chance to defend its position.
“The court is requesting us to give a simple undertaking which would obligate us to respond to any claims that the tax authorities have before we exhaust legal remedies. We cannot do that – especially in a situation when the actions of the tax authorities have been arbitrary in the past year,” a Nokia statement made to The Hindu said.
The local press said that Risto Siilasmaa, chairman and interim CEO of Nokia, had said that if the transfer to Microsoft does not go ahead, “we will have a factory, but we will not have a business” – a situation which would be “detrimental to our employees”.
The latest moves by the Indian tax authorities were also said by Nokia to “go against the spirit” of the December 2013 settlement.
India’s Economic Times noted that with rumours that talks between Vodafone Group and the government over a long running dispute are “on the verge of collapse”, there is a danger that foreign investors may be reluctant to invest in the country.