Nokia-Microsoft Deal One Step Closer to Complete
posted Saturday Dec 14, 2013 by Scott Ertz
One of the stranger hurdles in the Nokia transition to Microsoft has been a handset factory in India. The factory in question was seized by the Indian government because of owed taxes from Nokia regarding software licenses. The seizure meant that Nokia did not technically own the facility, which was scheduled to change hands to Microsoft.
This week, Nokia and the Indian government have worked out a deal to unfreeze Nokia India's assets in exchange for keeping a security account of roughly $365 million. The factory, even during the freeze, employed 7,000 people and continued to produce handsets for the company.
Nokia India has said that, even if the tax issue had not been settled, the purchase would have gone on without a hitch, having a contingency plan. The idea was that the factory would work as a contractor for the new Microsoft hardware division, providing Microsoft handsets exclusively. It can be assumed that, at some point, the factory could have transitioned to Microsoft had all tax issues been resolved in the future.
As it turns out, these types of tax issues are commonplace in India, whose tax laws are famously complex. Vodafone, a major international wireless carrier and soon-to-be former stakeholder in Verizon Wireless, has a dispute with the Indian government over tax issues related to a purchase within the country.
