Boston, MA 06/25/2014 (wallstreetpr) – Nokia Corporation (ADR) (NYSE:NOK) is locked in a tax dispute with the Indian government. The company is accused of irregular tax practice that allegedly saw the entity deny government some taxes. However, the company maintains there is nothing of the sort.
The tax issue is now becoming a complex legal matter in which international arbitration might be involved. According sources at India’s finance ministry, the government intends to tell Nokia that its efforts to have the matter addressed at the regional or international level cannot happen until all the legal opportunities available in the country are exhausted.
In its letter to the government in April, Nokia sought to talk about a bilateral settlement with Finland where tax issues are not covered. However, for the Indian government, the bilateral agreement is not only impossible in the current state of matters, but can only be involved when all else fails, which is not the case presently because the company has many legal opportunities to address the matter in the country. As such, the government wants Nokia Corporation (ADR) (NYSE:NOK) to know that anything about regional or international arbitration can only happen as a last resort.
Replay of Vodafone case
In citing bilateral or international settlement, Nokia seems to be reading a script from Vodafone Group Plc (ADR) (NASDAQ:VOD), which made similar moves to settle a tax dispute case with Indian government favorably. Nonetheless, it appears that the situation of Nokia is not entirely similar to that of Vodafone, and that means that the company cannot easily get away with its maneuvers.
Assets transfer to Microsoft
The dragging tax dispute stopped Nokia Corporation (ADR) (NYSE:NOK) from transferring its phone manufacturing assets in India to Microsoft Corporation (NASDAQ:MSFT) following the $7.4 billion deal to sell its devices and services business to the U.S. software giant. Microsoft has already unveiled its first Nokia phone since the acquisition of the Finnish company as it waits to own the Indian factory. Nokia X2 runs on Android as opposed to Windows Phone as widely expected.