The Income Tax Department has confirmed that India and Finland have reached an agreement under the Mutual Agreement Procedure (MAP) system and that the issue surrounding the alleged tax payable by Nokia “has been resolved”, paving the way for the company to sell its plant shuttered for long in Chennai .
“Proceedings [between the two countries] have been completed under MAP and the issue has been resolved,” a senior official in the Income Tax Department told The Hindu . “It appears that Nokia has agreed to make a provisional tax payment.”
Other officials in the Revenue Department of the Finance Ministry, confirming this development,said Nokia India had agreed to pay the ₹1,600 crore tax demand made by the Income Tax Department.
Nokia India was issued a demand notice for ₹2,500 crore in 2013, which was thereafter reduced to ₹1,600 crore. The Income Tax Department also raised a tax demand of ₹10,000 crore tax on Nokia Corporation for the same transaction, which has now been dropped under the MAP agreement.
Under the MAP system, settling an issue between two countries means closing all pending tax proceedings as well.
Software giant Microsoft had kept the Sriperumbudur factory out of the deal when it acquired Nokia’s mobile device business in 2014 due to the Income Tax notice and asset freeze imposed on the factory.