back to article India's most trusted brand Nokia hit with £1.5bn tax bill

Nokia’s efforts to turn around its flagging fortunes received a jolt this week after it emerged that income tax officials in India are preparing to hit the firm with a Rs. 13,000 crore (£1.5bn) bill for tax violations. In a classic piece of timing, the news came as Europe’s largest technology company was named winner of India’ …

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  1. frank ly
    Devil

    Putting on my devil's advocate hat .....

    "Transfer pricing ..... is one of the hottest areas of international tax fraud, ..."

    You seem to be pre-judging the issue :)

    1. Shagbag

      Agreed

      Transfer Pricing is a highly judgemental element of tax law where neither party (Tax Payer or Tax Authority) can be 100% sure of its position until the matter is settled either in or out of court.

      'Fraud' requires dishonest intention. A defendent can be found to have committed the act (eg. transfered goods between related parties at unacceptable prices) but without proof of dishonest intention there is no fraud.

      1. Anonymous Coward
        Anonymous Coward

        Re: Agreed

        Unlike in this case ;) -

        http://www.forbes.com/sites/francinemckenna/2011/02/18/satyam-settles-pwc-left-in-lurch/

      2. JaitcH
        WTF?

        Transfer Pricing: easy to prove

        Where a company such as McBarf or Starbucks charges a certain rate for 'services' to an Franchisee in one country, it follows that the worth of those services has been established.

        All the offended country has to do is to get it's hands on a price list and the case is made. These days governments are sleeping together when it comes to taxes as is the case with Korea and VietNam and Japan and VietNam - big bills have been rendered. And paid.

        It might not be fraud but it sure is against tax regulations.

        Many companies are paying far less than their PAYE employees AND the Tory party is giving industry all manner of breaks on top of these grants.

        Can anyone suggest a reason why the UK Frackers get a non-refundable grant, especially given energy prices in the UK these days?

  2. Anonymous Coward
    Anonymous Coward

    as the old Indian saying goes

    shave the sheep before it heads south

    1. Anonymous Coward
      Anonymous Coward

      Re: as the old Indian saying goes

      But admit it, it would be prettty funny if they directly cause the global demise of Nokia and PwC ;)

      Golden eggs are off today, Sir!

  3. Anonymous Coward
    Anonymous Coward

    PriceWaterhouseCoopers?

    Where do the auditors PriceWaterhouseCoopers stand in terms of liability if it proves the allegations are TRUE?

    1. Anonymous Coward
      Anonymous Coward

      Re: PriceWaterhouseCoopers?

      Maybe they will jail a couple of the partners like last time?

      From the local accounting company PwC bought for presence in the local market.

  4. John Latham

    Contemptuous snort at "trusted brand"

    Putting aside the historical meaning of torture-based cattle identification, "brand" is an entirely synthetic marketing concept developed by professional liars which deliberately separates meaningful things (products and companies) from each other.

    A "brand" is essentially a substrate for growing lies, and every time a marketing droid uses the word God kills a kitten.

    How anyone can trust a "brand" I have no idea.

    1. Sutton Stourmead
      Unhappy

      Kitten culling?

      Does that mean the internet is getting smaller?

      1. Anonymous Coward
        Anonymous Coward

        Re: Kitten culling?

        It probably worries the executives of YouTube, now mulling over an unprecedented tax on people watching videos of kittens. Fewer Kittens, less income.

        (And, phew, I nearly typed, "less kittens," there!)

    2. Anonymous Coward
      Anonymous Coward

      Re: Contemptuous snort at "trusted brand"

      If only, then at least we would be free of the plague of cats that he has sent down upon the earth to kill every small mammal and bird.

  5. Anonymous Coward
    Anonymous Coward

    should have stayed in hungary and finland, the fools

    The title says it all.

  6. Anonymous Coward
    Coat

    Slippery.

    1.5 billion...how badly does Nokia need "Help Desk" services? Pick a different country and move on.

    Thank you, come again!

  7. sicksung

    where did the difference goes to?

    345 millions of pre-tax profits could yield 1.5billion pounds of tax liabilities? can anybody tell me what is going on with Indian accounting system? before that the company was suffering for 6 consecutive losses. If I have no answer, can I assume corrupted govt. officials got paid by one of it's competitor to destroy Nokia? they have been giving bags load of money to remove Nokia products from their showcases in India!!

    1. Daniel B.

      Re: where did the difference goes to?

      As much as I don't like the taxman charging for unreal profits, the claim is that the 6 consecutive losses weren't real, and there was actual profit on those losses. Thus the 1.5billion is based on those profits.

  8. OldWarrior

    It appears that no official from India has actually gone on record about these rumors. Please note that every rumor quotes "Anonymous Sources"

    Reposted from Yahoo (message released from Nokia RE Tax Issue

    http://finance.yahoo.com/mbview/threadview/?&bn=220ef58e-d3dc-3807-9767-593835583c5f&tid=1359706820204-9b363906-9cce-4ca9-9a12-279f456d71cd&tls=la,d,61

    I received the below reply about the purported India Tax Evasion issue. This is the same reply given to another poster. So, one can assume, that Nokia is giving the same reply to ALL investors who ask--including large institutional types. Nokia is basically calling BS on the evasion reports. Should set up for an interesting day. I'll note, NOK is already trading up 2% in Europe...

    "Thanks for writing in. I appreciate your concern.

    To update you on the situation, we yesterday issued a statement, locally in India, as follows:

    “Nokia is fully cooperating with the Indian Tax authorities. We are duly responding to all queries raised by them and extending our full support in completing the investigation. 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. Since we arrived in India 17 years ago, we have honored all local laws and paid all taxes legally due. We look forward to resolving this issue quickly and fairly with the support of the Indian government.”

    It is worth keeping in mind that as of yet, we have not received any formal claims or formal notice from the authorities, nor has a single official gone on the record publicly in the media with any specific claims (although there have been plenty of “anonymous sources” speaking to media and spreading false rumors). When it is appropriate to take further steps in our communication, I can assure that we will do so and are ready to do so.

    For now, however, I can only emphasize that we have paid all taxes legally due. This is absolutely the case and therefore we look forward to resolving this matter swiftly.

    Best regards,

    James Etheridge

    Corporate Communications"

    Further posts on this page indicate that while there have been discussions between Finland and India, much of the rumors seem to come from a site hostile to Nokia.

  9. OldWarrior

    More on India Tax issues

    Also concerning the Vodaphone issue which is similar, it seems that the attack on Vodaphone was based on a retroactive law. http://in.reuters.com/article/2013/01/30/vodafone-india-chidambaram-idINDEE90S0GS20130130

    It is unclear to me if Vodaphone has yet to pay against this 5 year old claim.

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