A surprising revelation in a recent report by Financial Times, which covers Nokia’s tax woes in India draws one’s attention. It seems, Nokia-MS deal initially was set to “Microsoft buying Nokia corp’s equity shares and become a shareholder in the company”. It was only amended later to purchase of Nokia’s assets only. This, as per comments by Indian Tax authority (ACIT) may be a “convenient coincidence and is an internal collusive agreement”.
The ACIT has also drawn attention to the fact that the Microsoft-Nokia agreement has undergone two amendments without there being any independent valuation of assets by a third party. “The decision of Microsoft Corporation to not purchase equity shares of Nokia Corporation and to purchase its assets only which are already attached by the department is a convenient coincidence and is an internal collusive agreement”, the ACIT in its application said.
Now, we can’t be sure that Nokia India tax issue may prompt a change in terms of agreement between two global corporations, but it is very interesting nonetheless. Imagine a situation, where Nokia’s D&S division could have still existed with Nokia, after the deal and MS may have been supporting it from outside as a shareholder. Though, this could have compromised the “independent Nokia” that we are seeing now.
But, as a Nokia fan I could have loved to see Nokia still owning its D&S division and in an equity partnership with Microsoft. The proceedings from such deal could have helped Nokia financially as well.
Thanks TS for the tip. Cheers!!
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Source: FT
