Nokia threatens to leave India, calls it the “least favourable market”

Aug 23, 2013
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Earlier this year, Nokia had one of its facilities in India raided by the powers that be over what was said to be a very large unpaid tax bill, coming in at about $542 million. It has now been revealed that earlier this summer, Nokia sent a strongly-worded letter to the Indian government, saying that India had become the "least favourable market".

The tax issues haven't stopped for the company since earlier this year, part of which is said to be a delay in a VAT refund. In a paper sent to the nation's finance ministry in July, Nokia said that India has made it so that the company would find it better for its financial picture and business as a whole to leave operations in India for China instead.

Furthermore, back in March, India's finance ministry slapped Nokia with a retroactive income tax demand for software that was downloaded to handsets made at one of its regional factories back in 2006. This demand was a violation of a treaty betwixt Finland and India, according to Nokia. By retroactively instituting tax regulations and mandates - especially ones that violate already-existing treaties - India is creating an environment that will break the trust of businesses, says Nokia.

Said Nokia: "A holistic view is needed to understand the big picture and to ensure that possible short term benefits of aggressively changed fiscal policies do not override long term policies to develop Indian economy, create growth and jobs by attracting investments into India with predictable business environment as has been done in the past ... It is very important that the Indian government corrects quickly these surprising actions of individual tax authorities against Nokia to restore the trust of Nokia and other multinational companies in India as a good place of business."

Whether India has made a response to this is unknown, though it'll no doubt become a public matter one way or the other as the issue stretches on. For now, Nokia continues to harbor facilities in India, but if the threat is followed through with, those could end up being closed in favor of new factories being opened in China.

SOURCE: The Indian Express


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