Finland raises Nokia tax dispute ahead of President's visit

Helsinki: Hours before the arrival of President Pranab Mukherjee here, Finland on October 14 raised the issue of the tax row Nokia has with India, saying their company was facing a "great problem" and "other consequences" were possible due to lack of clarity and stability of rules.

Finnish President Sauli Niinisto said in the present situation investors would be having a question whether they should take risk or not. However, he did not elaborate on what the other consequences can be.

"The Nokia and Vodafone cases have raised some thinking and it is possible that certain investors are careful and prudent. I have not been aware of what governments have been doing. I just would like to point out that usually one needs clarity, you have to know the exact rules and the rules are stable. I understand that Vodafone has won one case last week, so that is positive news," he said.

"Surely I understand that it is a great problem for Nokia and other consequences are possible. Investors would be having a question whether they should take the risk or not. They might consider it as a risk. I haven't been discussing this with others so I would just figure out that this is one element that one has to take notice which is very natural for a businessman," he told a select group of Indian journalists at this residence on the outskirts of Helsinki.

Earlier, Finnish sources said the Nokia issue would certainly be discussed with Mukherjee but refused to go into details, citing secrecy. Interestingly, both - Mukerjee and Niinisto - were earlier Finance Ministers of their countries. President Mukherjee, who is currently in Norway on the first leg of his two-nation tour, will leave for Finland on October 14^th for a three-day visit.

In March, the Tamil Nadu government served a Rs 2,400 crore notice on Nokia, saying the firm had also sold products from the Chennai plant in the domestic market instead of shipping them overseas.

In a separate tax case, the Supreme Court had ordered Nokia India on March 14 to give a Rs 3,500 crore guarantee before it transfers the plant to Microsoft. "At a time when 60 per cent of the mobiles in the Indian market is imported, it was a pity that operations at the absolutely world class and cost-effective Nokia unit in Tamil Nadu had to be suspended," French said.

The Chennai plant has been frozen by tax department and the company could not transfer the facility to Microsoft. "It is an important issue for us because it is still a property owned by Nokia and we wish it wasn't owned by Nokia. We would have liked to transfer it (the factory) to Microsoft as part of their purchase of our devices business.

"We believe that would have been the best outcome for everybody and it would have kept everybody happy and work going on there. We were not able to transfer that asset to Microsoft because it was frozen as part of the tax dispute," he said. French said they tried to make the case with pretty much with anybody who would listen to them that they would like to sell that facility before it was too late.

"There is a great ecosystem of suppliers and so on. It just seems like a such a travesty to let it (the mobile unit factory) go waste particularly when the new Indian government has initiated the Make in India policy," he said. "I do believe that there would be companies out there who would be interested in the facility and as a way to tap into the Indian devices market," he added.