What Prompted This Raid on a Nokia Factory?

It appears that the taxman has caught up to Nokia (NYSE:NOK).

As the Indian government increases its efforts to limit tax evasion as a means to offset an ever-widening fiscal deficit, Indian tax officials have zeroed in on the company. One of the Finnish handset maker’s largest plants located in Chennai, India, was raided Tuesday, prompted by allegations that the company has avoided paying $543 million in taxes.

While the raid did not disrupt the manufacturing operations that produce more than 20 phone models, the visit by Indian authorities highlighted the numerous regulatory problems facing Western companies operating in the country. Many multinational corporations have complained about India’s business climate, citing its retroactive taxes, poor infrastructure, and unclear investment rules as deterrents…

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In August of last year, the head of Dell’s (NASDAQ:DELL) Asia Pacific operations told Reuters that doing “business in India is difficult because the problem is there are too many decision makers.” That same month Cisco’s (NASDAQ:CSCO) Chief Executive Officer John Chambers made a similar assessment on the company’s earnings conference call. “We continue to see India challenged largely self-inflicted by their own internal issues,” he said.

Nokia spokesman Brett Young told The Wall Street Journal that Indian Authorities gave no reason for the raid. But he did add that the company was “fully cooperating to ensure they get the necessary information to help in their inquiry.”

Vodafone (NASDAQ:VOD) may be set for a raid as well. The publication reported that Indian tax officials sent the company “another notice” regarding its $2 billion in unpaid taxes.

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