Nokia Takeover In Jeopardy Due To Alleged $3.4B Tax Bill In India 226
New submitter Snotboble_ writes "The government of India apparently thinks Nokia owes a lot of taxes. They originally told Nokia that the company owed around $340 million, but now reports suggest it could be an order of magnitude higher. Such a large liability would have consequences for Nokia's sale of its handset division to Microsoft. From the article: 'Nokia Corp.'s tax troubles in India worsened Tuesday as local authorities ratcheted up the amount of tax they say the Finnish company may owe to more than $3 billion. Nokia's battle to defend itself from the claims—one of the latest surprise tax bills slapped on big foreign companies in India—could affect its plans to sell its handset division to Microsoft Corp. as the phone company's factory in India is part of the $7 billion deal.'"
corruption (Score:5, Insightful)
nothing like a good 'ol shakedown by a government's tax authority
Re:corruption (Score:2, Insightful)
Does it count as racist that I'm absolutely *shocked* a western company has been dodging taxes?
Re:corruption (Score:5, Insightful)
You don't need to go farther than California to find an example of the government blackmailing people for "back taxes" [businessweek.com]. Fortunately, this time, the tax-hungry government was stopped in its tracks. However who in India will oppose taxing of a faraway, rich company?
Nokia's getting what it deserved. (Score:5, Insightful)
You want cheap labor?
You want little environmental regulation?
You want to hide from taxes in your home country?
Then build in the developing world. But don't cry when the developing world's lack of rules and regulations bite you in the ass with sudden "fees", "taxes", and other sundry costs. You chose to leave your home country to enhance shareholder profits. Surprise, the rest of the world doesn't have to operate according to your shareholder's profit motive.
Re:Why wait until now? (Score:5, Insightful)
Re:Announce shutdown of factory ... (Score:5, Insightful)
Ok, so you have $10k in a bank account in Peru. You want to transfer the money to your account in the US. The bank says that before you're allowed to move the money you have to pay a $500 tax to the government. So, you propose to just tell the bank to close your account and keep the money?
Sure, Nokia could abandon a factory to save on a much smaller tax bill. They could even burn their own factory to the ground to prove a point. However, it isn't exactly a great business decision.
BTW, this is one of the reasons why companies didn't move all their stuff overseas a generation ago. It wasn't like the pay disparity was any less back then. If you want luxuries like reliable electricity, no hostage taking, no need to bribe the local politician, and no government shakedowns, well, sometimes you have to pay your workers a bit more to go along with that...
Re:corruption (Score:5, Insightful)
dodging taxes? 3.4 billion doesn't seem like that really. it sounds more like changing the tax to be 10x of what they were told it would be when they started doing business locally.
the thing is, they had no way on earth knowing the taxes beforehand. nobody has. so how are you supposed to price the hardware beforehand? even if you ask one state government then another sub-state government is going to claim otherwise since they want the money too.
it's just another example why big industry is staying officially out of india... and it's hurting india. another option for a company is to bribe everyone continously.
heck, ikea had to fight over the right to sell meatballs... good news for China, Korea, Taiwan & all though since why bother with spooling up factories in India when they can't make up their minds about the rules? unstability of rules is number one reason why developing countries have hard time attracting serious investment... so the jobs they then get are something that doesn't need long term investment(like hand assembly.).
Re:Announce shutdown of factory ... (Score:3, Insightful)
If you want luxuries like reliable electricity
It's better than many third world countries but "reliable" is not the word I would apply to the US power grid
no hostage taking
Unless someone, somewhere declares you a terrorist, then they have a spot for you: http://en.wikipedia.org/wiki/Guantanamo_Bay_detention_camp [wikipedia.org]
no need to bribe the local politician
In the US they are called "Campaign Contributions" - functionally identical
and no government shakedowns
Unless you don't cooperate with the NSA - http://www.washingtonpost.com/blogs/the-switch/wp/2013/09/30/a-ceo-who-resisted-nsa-spying-is-out-of-prison-and-he-feels-vindicated-by-snowden-leaks/ [washingtonpost.com]
well, sometimes you have to pay your workers a bit more to go along with that...
Not really, the tax payers will pick up the slack - http://money.cnn.com/2013/06/04/news/companies/walmart-medicaid/ [cnn.com]
Re:You are not a racist, you are ignorant... (Score:3, Insightful)
Right. I might sound as a racist fuck, but I have to work with Indians almost every day. Maybe it's just the company not paying enough to get quality indians, but _everything_ they do is somehow wrong. I think I haven't got a single issue handled correctly. In many cases it takes more time to work with Indians than to just do it myself, but because of super stupid corporate politics I can't cut them out. I'd take any business out from there in a heartbeat judging by my own experiences. They have 1 billion people, thay can handle it without foreign businesses.
About this Nokia thing. Kinda funny how they first owe 300 million, then the week after the sum is 3 billion. Taxes just go up tenfold overnight? As far as I know Nokia claims they paid the taxes to Finland about the things Indina tax authorities are having an issue with ( some software installations or something ). I don't think India actually can stop the Nokia Microsoft deal from happening, they will simply remove said factory from the deal and continue. Maybe Nokia will simply leave India after that, I don't know if they manufactured anything but phones there.
Re:corruption (Score:2, Insightful)
major revolutions have not been done by majorities but rather by minorities using suitable anger of big portions of t he population at some stuff.
so it is possible. The amount of blood and rolling heads depends on how unified the sides are and big a difference between their forces.
Re:Announce shutdown of factory ... (Score:4, Insightful)
So no, the problems are not as bad, but continuing on the path we're on will get us there.