PTI | 14 May 2014
Nokia invokes India-Finland bilateral treaty to solve tax row
With tax authorities pressing with over Rs 21,000 crore in unpaid dues, Finnish telecom major Nokia has invoked the Bilateral Investment Promotion and Protection Agreement (BIPA) India has with Finland to resolve the dispute.
Nokia late last month wrote to Prime Minister invoking dispute settlement clause in the India-Finland BIPA to settle the row that had led to its Chennai plant being left out of the over $7.2-billion deal with Microsoft.
The treaty provides for amicable conciliation proceedings and arbitration under local and the United Nations Commission on International Trade Law (UNCITRAL).
“Nokia is keen to work with authorities in India to resolve the tax disputes. As one of our actions, Nokia has sent a letter under Finland India Bilateral Investment Treaty (BIT) to the Prime Minister of India. The letter seeks for amicable resolution of the current tax disputes,” a Nokia spokesperson told PTI.
Nokia, which last month completed sale of its handset business to Microsoft for over $7.2 billion, could not sell its Chennai manufacturing plant to the software giant as it is embroiled in the tax dispute with the Income Tax Department and the Tamil Nadu Government.
The company had approached the Prime Minister’s Office (PMO) last month with the request.
However, BIPA clauses state that if a dispute between the country and the investor cannot be settled amicably within 3 months, the investor can approach local courts or seek international conciliation under UNCITRAL Conciliation Rules for its resolution.
The party can also approach the International Centre for Settlement of Investment Disputes or approach an adhoc arbitral tribunal under the Arbitration Rules of UNCITRAL.
On the status of request made by the Finnish government last year to consider resolving the tax row under mutual agreement procedure, Nokia said: “Both the governments started the mutual agreement process (MAP) with an aim to resolve double taxation as per the provisions of India — Finland double tax treaty and negotiations are still on.”
The application for negotiated settlement of the tax dispute was filed under the Double Taxation Avoidance Agreement (DTAA) between India and Finland.