Nokia’s appeal over asset transfer to Microsoft rejected by Supreme Court
Nokia loses tax appeal in India as it attempts to transfer its devices business to Microsoft
The Supreme Court of India has ordered Nokia to pay a 35 billion rupee ($572m) guarantee before transferring its Chennai manufacturing plant to Microsoft. The order relates to Nokia’s long-term dispute with Indian tax authorities over $340 million in unpaid taxes.
The ruling comes less than two weeks after Nokia escalated its tax dispute, after setting aside ₹22.5 billion ($367 million) in an escrow account in order to secure the manufacturing plant from the government. But the Indian IT department believes the amount the amount isn’t enough to meet its tax claims, which are between $650 million and $3.4 billion.
With the Supreme Court upholding the IT department’s demands, Nokia may have to put up the extra cash as a guarantee or may shut down its handset manufacturing plant altogether. Nokia’s Chennai manufacturing plant is one of Nokia’s largest globally, with over 8,000 employees and constituting nearly 25 percent of the workforce that will be transferred to Microsoft.
Microsoft had announced that it will acquire Nokia’s Devices and surfaces business in a $7.2 billion deal in the first quarter of 2014. But after the court ruling Nokia has announced the sale would occur in April instead.
“Nokia and Microsoft have already received most of the required regulatory approvals, including approvals from the European Commission and the US Department of Justice. Furthermore, Nokia and Microsoft continue to make good progress related to the closing conditions and integration planning. However, the transaction is pending approvals from certain antitrust authorities in Asia which are still conducting their reviews,” Nokia said in a statement.
Source: Reuters