HELSINKI (Reuters) - Nokia NOK1V.HE has offered to pay a 270 million euro deposit to Indian authorities to unfreeze assets in a tax dispute, according to sources familiar with the matter.
The Finnish firm has been trying to free up the assets, particularly its Chennai factory which is one of its biggest phone-making plants, ahead of the sale of its mobile phone business to Microsoft (MSFT.O).
The offer comes on top of an earlier agreement to pay around 85 million euros, although Nokia hopes to eventually retrieve the payments if the tax dispute is resolved in its favour, one of the sources said on Monday.
The combined payment would exceed the income tax bill of 20.8 billion rupees demanded by local authorities in one of several tax disagreements involving foreign companies in India.
While Nokia has said it does not expect the dispute to affect its 5.4 billion euros deal with Microsoft, which is expected to close in the first quarter of 2014, a lengthy asset freeze could complicate matters by preventing the transfer of ownership in the Chennai plant.
An asset freeze would allow the facility to operate as usual but prevent a change of ownership. If it is still in place when the Microsoft deal is finalised, Nokia could briefly operate the plant as a contract manufacturer for Microsoft, but both companies are hoping to avoid this.
Nokia declined to comment beyond saying it was committed to getting its Indian assets unfrozen and “once again calls on the Indian government and tax authority to work with urgency towards a solution”.
The Delhi High Court is due to hear the case on Tuesday.
Reporting by Ritsuko Ando; Editing by Tom Pfeiffer and Mark Potter