Tax officials inspect Nokia factory in India

“Earlier today, tax authorities visited Nokia's manufacturing unit in Chennai. We are fully cooperating to ensure they get the necessary information to help in their inquiry,” a Nokia spokesman said in a statement.

“We always observe applicable laws and rulings in the countries where we operate,” the Finnish handset maker added.

India — one of the world's fastest growing mobile phone markets — is Nokia's second largest market, with the Chennai factory producing over 20 different models for the company.

Chennai's chief income tax commissioner S. Senthamarai Kannan told reporters officials had conducted a “survey” of Nokia's factory, suspecting tax evasion of about 30 billion rupees (US$545 million), media reports said.

Nokia is not the only multinational firm facing a tax probe in India.

British mobile network firm Vodafone received a fresh notice last week from Indian tax officials stating it owes more than US$2 billion in taxes on its 2007 purchase of a stake in a domestic telecommunications company.

Vodafone maintains it is not liable to pay any tax on the transaction.

In November, an Indian minister said in parliament that the country is probing a local unit of candy giant Cadbury for evading millions of dollars in taxes.

India's finance minister, P. Chidambaram, has vowed to clamp down on tax evasion to help to lower the country's wide fiscal deficit.

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