A Nokia mobile phone manufacturing plant in Chennai, India—Nokia’s largest manufacturing center worldwide—will not be part of Microsoft’s Devices and Services acquisition set to close on Friday, due to an tax dispute in India.
According to Reuters, Nokia will operate the factory under a service contract for Microsoft until the dispute is resolved. Before it transfers the factory to Microsoft, Nokia must agree to the conditions set by the Indian court. The final terms of the tax settlement have not yet been reached.
Back in December, Nokia was hit with a US$3.4 billion tax bill on the Chennai factory, claiming back taxes and penalties dating back to 2006. The Indian government had frozen Nokia’s assets in the country back in September after the Microsoft deal was first announced, but Nokia won an appeal in December that lifted the freeze. The appeal was later overturned.
Nokia’s lawyers are on record saying the company will not run the factory beyond a 12-month period after the close of the acquisition.