Indian assets of Nokia have been frozen by the tax authorities to ensure that Nokia has enough money to pay its tax bill of millions of dollars.
Nokia has said that it is working with the Indian tax authorities to resolve the issues. The tax authorities also raided the Chennai factory of Nokia in January this year on the issue of outstanding tax liabilities.
Nokia entered the Indian market in the mid 1990s and India is an important market for it. Its first plant was opened in Chennai in 2006 where the low cost Asha series of Nokia phones is produced. These phone are popular in many emerging mobile markets where people do not have buying power for high end phones from companies like Samsung, Apple etc.
Nokia, once the biggest phone manufacturer of the world has fallen far behind the competition in the age of smartphones where the competition is neck breaking.
Many other western companies have also been in trouble with the tax authorities in India. For example Vodafone has been pressed by the authorities to pay as much as $3 billion tax liability related to its acquisition of a local cell phone company in 2007. Other companies like Shell and General Electric have also faced similar issues with the tax department.
Nokia has said in a statement that:
“We are now working closely with the tax authorities. Nokia has sufficient assets in India to meet its tax obligations.”