Finnish mobile-phone manufacturer Nokia, which is locked in a Rs 2,000-crore tussle with the tax department, is now planning to take refuge in the India-Finland Double Taxation Avoidance Agreement (DTAA). CNBC-TV18's Ashmit Kumar reports that Nokia hopes to invoke the dispute settlement mechanism under the DTAA.



Nokia has started to take refuge in the alternative dispute resolution mechanism provided for in the Indo-Finnish DTAA.


The DTAA has a mutual agreement procedure (MAP) or mutual agreement clause which allows Nokia’s parent company in Finland to approach competent tax authorities in Finland who then will then negotiate the issue with the Indian tax authorities in India.


In India, the office of the joint secretary of the foreign tax and tax research (FTTR) division is mandated to handle such issues.


Under the MAP, these tax authorities from separate jurisdictions will negotiate the Rs 2,000-crore tax dispute.


However, experts conclude that the tax department does have a strong case and the Finnish tax authorities will have a difficult time negotiating and finding common ground.