Nokia India has got itself into a terrible mess over alleged failure to deduct TDS on royalty payments to its parent company. What would have ended with a mere 10% tax rate has now morphed into a horrendous tax liability. Nokia is now desperate to sell its assets but the Income-tax department has a strangle-hold over it and is calling all the shots. It will take all of Harish Salve’s wizardry to pull Nokia out from the deep hole it is in. Can he do it?
Anybody dealing with multinational conglomerates will tell you that their biggest problem is one of overconfidence and lack of accountability, especially when dealing with poverty-stricken third World countries. Deals worth billions of dollars are put through by some expatriate executive, high on adrenalin, sitting in an exotic location like New York, London or wherever, without a second’s thought for the legal and tax implications in the dusty by-lanes of the Third World Country where the deal is to be implemented.