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Nokia’s Chennai plant would be left outside of Nokia-Microsoft agreement if tax dispute isn’t resolved and assets aren’t unfreezed before 12 December. Photo: Mint
Nokia’s Chennai plant would be left outside of Nokia-Microsoft agreement if tax dispute isn’t resolved and assets aren’t unfreezed before 12 December. Photo: Mint

Nokia employees to move Delhi HC over firm’s tax dispute

A non-payment of tax might lead to closure of Nokia's Chennai plant where the employees work

Chennai: Facing uncertainty over their future in the wake of Nokia Corp.’s 6,500-crore tax dispute, employees at the Finnish handset major’s facility in Sriperumbudur near Chennai have decided to move the Delhi high court, which is hearing the case.

Recently, Finland’s foreign minister Erkki Tuomioja had said that in the worst case the Chennai plant could face closure. He had also said that unless this tax dispute is solved and the assets of its Chennai plant unfreezed before 12 December, the plant would be left outside of Nokia-Microsoft agreement.

As uncertainty stares the plant’s 8,000 employees, Nokia India Employees Union representatives left for New Delhi on Thurssday to approach Delhi high court for resolving their issue.

“They have already left for New Delhi. We are concerned that after 12 December, for one year there will be contract manufacturing in Sriperumbudur. We do not want contract manufacturing employees. We do not know what will happen after one year. We only want this plant to be merged with Microsoft," a union official told PTI.

The income tax department had slapped a notice on Nokia’s Indian subsidiary for violating withholding tax norms since 2006 while making royalty payments to the parent company in Finland.

Nokia moved the Delhi high court seeking lifting of stay on transfer of its assets in Chennai to software giant Microsoft and offered to pay a minimum deposit of 2,250 crore as tax, contending that the injunction will jeopardize the sale of its Indian arm to Microsoft under the global deal. Nokia’s offer was rejected by revenue department.

It may also be noted that the tax dispute has played spoilsport for the Chennai plant in Microsoft Corp.’s $7.2 billion deal to acquire Nokia’s equipment business.

Software giant Microsoft is set to acquire Nokia’s handset business for €5.44 billion euros ($7.17 billion) in cash, in an effort to strengthen its position in the smartphone market. The Nokia-Microsoft deal is expected to close in the first quarter of 2014, subject to regulatory approvals and other customary closing conditions.

Nokia had earlier said if the sale of the Chennai plant does not happen, the company would wind up its operations over a period of 12 months. The Chennai-plant employs about 8,000 people with 20% of them women and about 30,000 sub-contractors.

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