Nokia's (News - Alert) plant in Chennai, India, was raided this week by Indian tax officials. Some 20 government tax officials arrived at the Nokia plant in Sriperumbudur and Nokia’s offices in Chennai on Tuesday.
The company said it will cooperate with government officials, but it remains unclear what documents they were searching for, Reuters reported.
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"Nokia is fully cooperating to ensure they get the necessary information to help in their inquiry," Nokia’s Brett Young told The Wall Street Journal.
The inquiry may relate to questions over whether Nokia paid $543 million in taxes, Reuters (News - Alert) reported based on a statement from an unnamed government official. There could be a controversy over the distribution of tax payments between India and Finland. Finland is where Nokia is headquartered.
India's finance ministry says it is going after tax evaders given the nation’s fiscal deficit.
In another recent situation, Indian tax officials claim Vodafone (News - Alert) owes over $2 billion in taxes related to the majority acquisition of an Indian telecom company, Hutchison Whampoa Ltd., in 2007.
Such actions make it more difficult for tech companies to operate in India. Besides tax officials, foreign companies have to deal with unreliable energy sources, government red-tape, and examples of poor infrastructure – all at a time when India is trying to increase the number of tech plants located in the nation.
Tax officials are a frequent target of criticism by taxpayers. For instance, over a year ago some Indian farmers dumped bags of snakes in a Basti tax office. The snakes totaled about 40, and included at least four deadly cobras. No injuries took place as a result of the prank.