Nokia's tax issues in India get deeper

Written by Andre Yoskowitz @ 31 May 2013 7:34 User comments (1)

India has now demanded that Nokia pay 2.09 billion rupees ($40 million USD) in taxes, claiming the company wrongfully claimed an exemption on software exports.

Nokia, for its part, says the claims have no merit, but they are fully cooperating with Indian tax authorities on the matter.

The new demand is in addition to a recent raid on Nokia's phone manufacturing facility in the nation and its demand for 20.8 billion rupees in back income tax and penalties. Nokia denied those charges, as well.

Indian officials have been increasingly cracking down on alleged tax evasion by multinationals, and big caps like Vodafone, Shell and Cadbury have all received similar demands.

The new demand revolves around a 12 percent service tax that Indian companies can use on software that is developed and used in India. If you export it, you do not have to pay taxes on it. Tax officials allege that Nokia exported the locally developed software to itself, and then used it in products manufactured in India.

Tags: Nokia India

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19.6.2013 02:11

pmshah

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"The new demand revolves around a 12 percent service tax that Indian companies can use on software that is developed and used in India."

The sentence does not make sense. The words "can use" should actually be "have to pay".

It incidentally so happens that service tax is levied on charges covering services. Grant of software license - as it actually is and not a sale - falls under this category and is taxable. BTW there is ZERO import duty on software. So this is an out right circumvention of tax.

I remember in the past HP used to sell their inkjet printers at throw away price to HP India since they were being so called - "given away for free" with their PCs. Indian customs took a dim view of this claiming circumvention of duty and charged them duty on actual price the printers were being sold to third parties which represented the real price of the printers.

Watch out Apple ! I wonder what did you pay on iPhone 1 which was fully developed in India !

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Nokia's tax issues in India get deeper

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