Nokia hits out at Indian tax inspectors Nokia called the actions of Indian tax inspectors "excessive, unacceptable and inconsistent" as its dispute in the country escalated dramatically. The struggling Finnish mobile phone manufacturer sent letters to tax authorities in the Indian city of Chennai arguing that their actions were contrary to Indian and international law. Nokia said it had not received any official information on the tax claims but had heard about them through the media. When the story first broke last month, a senior Indian tax official told Reuters the investigation was into allegations Nokia had evaded about Rs30bn ($557m) in taxes, though such claims are routinely inflated at the start of investigations in the country. Nokia on Tuesday said: "As a company with operations around the globe, Nokia believes the actions of the income tax authorities in Chennai are excessive, unacceptable and inconsistent with Indian standards of fair play and governance. Specifically, in tax investigations like this, local standards would prohibit government officials from entering the factory premises and Nokia IT systems without valid authorisation [or] questioning individual employees for intolerably long periods of time, even after they have fully co-operated with the authorities. The case is the latest in India involving major multinationals which have made many foreign businesses nervous about investing in the country. Earlier this month Anglo-Dutch oil group Shell said it would fight a tax demand for as much as Rs155bn. Vodafone last week also announced plans to contest a smaller Rs13bn claim, in addition to its attempts to negotiate a final deal to resolve its longstanding $2.6bn dispute relating to allegations of unpaid capital gains relating to a deal in 2007. The recent flurry of demands is in part a result of the fiscal crunch faced by Prime Minister Manmohan Singh's administration in advance of its budget in March, as it struggles to stop its fiscal deficit rising to more than 5.3 per cent of gross domestic product next year. "There is enormous pressure to deliver more revenue and so the general level of aggression from the tax office is an outcome of this pressure the government is under to collect more revenue," says Bobby Parikh, a partner at BMR & Associates, a Mumbai-based tax firm. It is not a very happy situation for India, given there is now a rising level of tax uncertainty which companies are exposed to and it raises new concerns in the minds of many large investors about how much they will have to pay. Nokia said it understood from the media reports that the tax claims were focusing on payments for operating software supplied by the parent company in Finland. It added that it had acted in full compliance with local laws and the tax treaty between India and Finland. "It is important to note that since setting up the factory Nokia's transfer pricing policy has been regularly scrutinised and validated by the Indian and Finnish tax authorities in the normal course of tax proceedings," the Finnish group added. Nokia first entered India 17 years ago and set up its Chennai factory in 2006. The plant employs more than 9,000 people and Nokia has invested more than $330m in Chennai in total.