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According to sources, Timo Ihamuotila, Nokia Group’s executive vice-president and chief finance officer, with Barry French, executive vice-president (marketing, communications and corporate affairs), met Sitharaman, who is also minister of state for finance.
The tax dispute had forced the MNC to abandon plans to include its Chennai plant in the sale of the company’s handset business to Microsoft earlier this year. Sources have also indicated that Nokia might seek permission to sell its Chennai facility to pay its tax dues.
"Nokia continuously works with authorities in Indiato resolve tax disputes and seeking for amicable resolution of the disputes," the company stated.
Nokia had also invoked the Bilateral Investment Promotion and Protection Agreement between India and Finland. However, the government is reportedly planning to convey Nokia that the issue cannot be resolved this way, as the agreement does not cover tax issues.
In a letter to the government in April, Nokia had argued the tax authorities were indirectly expropriating the company's money, which affected its net worth and return on investment. These issues are covered in the investment treaty.
Nokia was in a hurry to settle the dispute because of its $7.2-billion deal with Microsoft. The dispute led to Nokia's factory near Chennai, one of its biggest phone-making units, being left out of the deal. In March 2013, the tax authorities had served a notice on Nokia for allegedly wrongfully claiming exemption on royalty payments made against supply of software by the company's parent firm for five years starting 2006-07.
The first notice was for Rs 2,000 crore; tax officials says the total demand, including past years' arrears, would go up to Rs 12,000 crore. Besides, the interest component will take the dues to Rs 21,000 crore. The tax department can also levy a penalty of 100-300% of the total dues.
