Transfer
pricing laws of India and income tax provisions are in
limelight these days in India. Related issue like foreign direct
investment (FDI) is also raised from time to time. Indian
government would ascertain beneficiary in Walmart probe to
ascertain possible violation of Indian laws.
In a significant and related regulatory development,
the Competition
Commission of India (Procedure in Regard to the Transaction of
Business Relating to Combinations) Regulations, 2011 have
also been formulated by the Competition Commission of India in 2011
to regulate anti competition combinations. The same may be pressed
more frequently in the year 2013.
Vodafone is already managing a tax dispute with
Indian government. In fact, Vodafone
may invoke arbitration for fresh tax demands by India.
Similarly, recently Shell
India received a transfer pricing order from Indian tax authorities.
Now Nokia has been accused of income tax and transfer pricing laws of
India.
The income tax department believes that besides
income tax violations, Nokia India may have flouted transfer pricing
norms as well. The total tax implication for the Nokia could be over
Rs 10,000 crore. It is also alleged that the Indian subsidiary of
Nokia transferred profits to its headquarters and the same will now
be reversed and considered as income, which would be around Rs 30,000
crore. On this amount, there will be a 30 per cent tax, which works
out to Rs 9,000 crore.
Further, Nokia India also downloaded software
from its parent company in Finland to manufacture mobile devices
worth Rs 30,000 crore at its Indian plant. Royalty is paid for the
software downloaded. This, in turn, attracts a 10 per cent tax
deduction at source (TDS) amounting to Rs 3,000 crore.
According to income tax officials, Nokia had failed
to do this and pay to the Government. Officials in Delhi will now
issue an order on the amount, including penalty if any, payable by
Nokia. Meanwhile, Nokia is claiming that it has complied with all the
applicable laws of India and is fully cooperating with the
authorities.
For our readers, we at Perry4Law
and Perry4Law’s
Techno Legal Base (PTLB) have provided a research report
titled Global
Taxation and Anti Competition Regulatory Issues In 2012 And
Projections Report for 2013 by Perry4Law that is
discussing these issues. The report highlights global taxation issues
including the recent allegations of tax avoidance labeled against
Amazon,
Google and Starbucks regarding UK Tax Laws.
