Resolve Nokia tax case soon to maintain investor confidence, Finnish minister urges India

NEW DELHI: India remains a positive investment destination but the country has to be careful in dealing with the tax cases involving multinational companies such as Nokia and others to ensure that perception of investors do not change, a top minister of Finland said on Tuesday.

Alexander Stubb, Finland’s minister for European affairs and foreign trade, who is leading a business delegation to India, met several Cabinet ministers to discuss Nokia’s tax issue and hoped that a solution would be found. “I still think India has a positive investment climate but will have to be careful and see how these two or three, four or five cases end up because you know the tipping point comes at some stage. If there is a feeling that there are too many multinationals, which have been hit, then money goes where it is cheapest,” Stubb told TOI.

Nokia and a string of multinational companies have come under the scanner of tax authorities of India. The companies have denied any wrong doing but tax authorities say they need to protect revenues. “From what I have gathered it is an issue of software and where software at the end of the day should be taxed. It is also my understanding that Nokia has paid 650 million euros in taxes in India already ,” Stub said.

“In today’s value chains it is very difficult to determine exactly where a product has been put together. Nokia Lumia phone, for instance, has been put together in 15 countries. That’s why we do agreements on double taxation and that’s why companies have preset agreements where they actually raise their revenues or where they pay their options.

It is my understanding that something has changed during the course of the past year or two but hopefully it will be settled,” the Finnish minister said, adding that he had met Telecom minister Kapil Sibal, commerce & industry minister Anand Sharma and would have a telephone conversation with finance minister P Chidambaram on the issue. Stubb said India has been a positive brand in the past few decades as an investment destination but cautioned that the situation may change if perceptions of investors swing.