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Nokian to Appeal Additional Tax Bill

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Nokain Tyres is appealing a tax adjustment for 2007-2010 that requires the tiremaker to pay an extra 87 million euros. The adjustment includes an additional 55 million euros in additional taxes and 32 million in punitive taxes that must be paid by January 2016, Tyres and Accessories reported.

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Nokian described the tax adjustment decision as “unfounded” and is appealing against the decision, T&A said. If the claim does not lead to annulment of the tax decision, Nokian’s corporate tax rate is expected to rise in the next four years, from 17% to 22%.

The tax adjustment was made after the Finnish Tax Administration’s Large Taxpayer’s Office carried out a transfer pricing tax audit investigating the intercompany transactions between Nokian Tyres plc and its subsidiaries. The tax administration found that Nokian’s Russian subsidiaries, which is technically considered as a “low risk contract manufacturer” rather than a modern factory in its own right. This has led to the Russian subsidiaries profits to be added to Nokian’s taxable income in Finland, T&A reported.

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Nokian argues that “this leads to double taxation of income, which is contrary to existing tax treaty.”

The Finnish Tax Administration is still considering a reassessment decision for 2011, so Nokian may foot an even larger bill.

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