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There is a bad news for <keyword id="6354716" type="CITY" weightage="100" keywordseo="Nokia">Nokia</keyword> India. <a href="http://www.businessinsider.in/searchresult.cms?query=Income+Tax+department+">Income Tax department</a> has slapped fresh tax notice on the firm, which wants the fresh demand to be included in the ongoing negotiations between India and Finland to resolve the Rs 2,000-crore tax dispute which was imposed earlier. 
 
According to a senior <a href="http://www.businessinsider.in/searchresult.cms?query=Finance+Ministry+">Finance Ministry</a> official, the fresh <a href="http://www.businessinsider.in/searchresult.cms?query=Finance+Ministry+">tax demands notice</a> was served to Nokia India for dispute relating to other assessment years, apart from the one being contested currently in ITAT. 
 
However, there is no information about the demand raised or the action that the IT department has proposed. 
 
In 2003, the department had slapped a tax notice of Rs 2,000 crore on Nokia's Indian subsidiary for violating the withholding tax norms since 2006 while making royalty payments to the parent company in Finland. 
 
Nokia's mobile unit has now been sold off to <a href="http://www.businessinsider.in/searchresult.cms?query=Microsoft">Microsoft</a>, but the Chennai factory, which is involved in the tax dispute was not included in the deal. 
 
The company wants the notices to be included in the ongoing discussions under the Mutual Agreement Procedure (MAP), said the official, adding senior officials from India and Finland would meet soon to decide on the course of action. 
 
After being asked about the notice served to the <a href="http://www.businessinsider.in/searchresult.cms?query=telecom+company">telecom company</a>, it said: "Nokia has indeed received a claim from the tax authorities - it is largely about the same dispute as earlier, so we have nothing to add." 
 The government has been emphasising on early resolution of pending <keyword id="411664" type="UNKNOWN" weightage="60" keywordseo="tax-disputes">tax disputes</keyword> with a view to make the tax regime more predictable and investor friendly. 
 
Meanwhile, MAP is an alternative available to taxpayers for resolving disputes involving double taxation. However, there is no time frame for resolving cases under MAP negotiations. 
 
(Image: Indiatimes)

Nokia India in trouble again! Income Tax department slaps fresh tax notice against it

Expressing a desire to solve the ongoing tax dispute with the government in a friendly manner, telecom equipment maker Nokia said it would like to exhaust other options first than arbitration. 
 
Nokia is in Rs 20,000 crore-odd tax dispute after authorities froze its assets in India and prevented transfer of its Chennai handset manufacturing plant to Microsoft, which acquired its devices business globally last year. 
 
The Finnish firm, Nokia, sent India an arbitration notice, while highlighting the tax case could create negative sentiment among foreign investors, who have cited cases involving Nokia, Vodafone and Cairn, among others, to view India with suspicion when it comes to policy certainty and clear tax laws. 
 
"There are better ways to resolve those (tax) issues (than arbitration) and we would like to exhaust those options first," Barry French, executive vice president of marketing and corporate affairs at Nokia, told Economic Times in an exclusive interview. He told the financial daily that India was "incredibly important" and would remain so after the 150-year-old company completes its acquisition of Alcatel-Lucent. 
 
Nokia will try to settle through the ongoing legal process or mutual agreement procedure under a double taxation avoidance agreement with Finland. 
 In April 2015, Nokia had sought <keyword id="6354814" type="UNKNOWN" weightage="100" keywordseo="prime-minister-Narendra-Modi">Prime Minister Narendra Modi</keyword>'s intervention to get the asset freeze on its factory lifted. 
 
"We have seen the right desire to resolve the issues," French told ET. 
 
Meanwhile, Nokia also laid emphasis on India's potential as a manufacturing hub, saying the dispute aside, it has had a fruitful experience in the country and other multinationals should set up shop to reap the benefits. 
 
"Our overall experience in India, setting aside taxation issues, in terms of the quality of people, the infrastructure, has been very good. We would encourage every company to come and manufacture here," French told the financial daily, adding, “to those who don't because maybe they are nervous about India, because they don't understand India, we will say you should take the plunge and come here." 
 
(Image: Reuters)

Nokia cajoles Indian Government to settle Rs 20,000-crore tax dispute amicably

The <keyword id="6354751" type="COMPANY" weightage="80" keywordseo="Income-Tax">Income Tax</keyword> department today told the <keyword id="6355014" type="ORGANIZATION" weightage="80" keywordseo="Delhi-High-Court">Delhi High Court</keyword> that the amount offered by an "arm's length buyer" for <keyword id="107835" type="CITY" weightage="80" keywordseo="Nokia-India">Nokia India</keyword>'s Chennai mobile making plant, frozen over an alleged Rs 10,000 crore tax dispute, is "very little". 
 
 The submission was made by the IT department before a bench of justices Badar Durrez Ahmed and <keyword id="342753" type="PERSON" weightage="80" keywordseo="Sanjeev-Sachdeva">Sanjeev Sachdeva</keyword> while seeking an urgent hearing of a plea filed by <keyword id="6354716" type="CITY" weightage="80" keywordseo="Nokia">Nokia</keyword> which has sought permission to sell the assets as it had found a prospective buyer. 
 
 
The department mentioned the matter before the bench for an early hearing as it could not be taken up yesterday. 
 
The court, however, refused to hear it today and told the department to file an application if it wants the matter to be heard before the next date of hearing on September 7. 
 
 
It also asked the department on what basis it was claiming the amount offered for Nokia's Chennai plant was very little. 
 
An arm's length transaction is the one in which the buyer and seller of a product act independently and have no relationship to each other to ensure that they act according to their self-interest and are not influenced by the other party. 
 
 
Nokia on April 17 had submitted before the court and IT department the name of the prospective buyer and the offer made in a sealed cover. 
 
The court had on that date asked the department to examine if the offer was acceptable and if not, then it should consider appointing an independent valuer to carry out valuation of the plant and related assets. 
 
 
Another alternative the court had suggested was to put up the assets for auction, by making the amount offered as a reserve price, saying "ultimately we have to maximize the price". 
 
The department today told the court that the offer amount is very little and if the unit and related assets were sold, it would be difficult to recover the tax amount which it has tentatively placed at Rs 10,000 crore. 
 
 
According to the IT department, the amount is for only one assessment year and there are other assessment years. 
 
It had earlier told the court that as per previous orders, Nokia or its parent company in Finland had to secure the department up to an amount of Rs 3,500 crore, but the same has not been done yet.

No takers for Nokia's Tamil Nadu plant?

Nokia's efforts to sell its Chennai plant face another setback as tax authorities have insisted the company provide a guarantee of up to Rs 3,500 crore over an ongoing dispute before a freeze is lifted on assets. 
 The Finnish company has called on the <keyword id="71" type="POSITION" weightage="80" keywordseo="Prime-Minister">Prime Minister</keyword>'s Office to help resolve the issue reported The Economic Times. 
 The income-tax department filed the affidavit in the <keyword id="6355014" type="ORGANIZATION" weightage="80" keywordseo="Delhi-High-Court">Delhi High Court</keyword> a few days ago, said people with knowledge of the matter. The step effectively goes against an agreement between the two that proceeds from the factory's sale would go into an escrow account pending a decision on the Rs 21,153-crore tax row. 
 
A Nokia spokesperson and a company lawyer confirmed to ET that such an affidavit had been filed. 
 
The pact between the two sides was to be presented in the court on April 6, when the matter would come up for hearing. But I-T department's affidavit seems to run counter to this accord. 
 
The move comes as the government has been saying that all efforts were being made to get the factory sold. 
 "We have started efforts in this direction. The Nokia plant should start functioning again and people will get employment," Prime Minister <keyword id="6354477" type="PERSON" weightage="80" keywordseo="Narendra-Modi">Narendra Modi</keyword> said in the Rajya Sabha on March 3. 
 The move could undermine the government's push to revive India's image among investors globally by putting a stable, nonadversarial tax regime in place. However, it's also not possible for the government to give up on tax proceedings based on retrospective amendments made in 2012 that has led to high-profile disputes with companies such as Vodafone, Cairn India and others, ET reported. "Our main focus at the moment is what we have consistently said since October: with production at Chennai suspended, we call on the government to lift the asset freeze imposed by the tax authorities so we can explore potential opportunities for a sale to a suitable buyer," the Nokia spokesperson said. "The approach of the government will lead to the perception that India is continuing with aggressive tax policies," said <keyword id="173502" type="PERSON" weightage="80" keywordseo="Dinesh-Kanabar">Dinesh Kanabar</keyword>, chief executive of tax advisory firm Dhruva Advisors and former KPMG India deputy CEO. "When the government decided not to go to the <keyword id="6354977" type="ORGANIZATION" weightage="80" keywordseo="Supreme-Court">Supreme Court</keyword> on the Vodafone tax case, it sent a very positive signal to the international community, and one would wish that government would be pragmatic. Likewise, in the Nokia case, asking for payment of huge demands which are yet to fructify, will not stand India in a good stead." 
 
Seeking PMO's intervention 
 Nokia has sought the PMO's "immediate intervention" in resolving the asset freeze issue before the case comes up for hearing next week as "efforts to revive manufacturing operations are in imminent danger of irretrievable break-down", the company said in a letter. The "shocking" approach of the income-tax department will effectively block Nokia India from selling the factory and "we would reach a deadlock", Barry French, head of marketing and corporate affairs at <keyword id="59633" type="COMPANY" weightage="80" keywordseo="Nokia-Corp">Nokia Corp</keyword>, said in the note. ET has reviewed a copy of the letter. "We strongly believe that such an undertaking demand is counter to the spirit of cooperation which has been arrived at under your guidance," Nokia said in the letter. 
 <keyword id="6425677" type="CITY" weightage="80" keywordseo="Essar-Group">Essar Group</keyword> Chairman <keyword id="2791886" type="UNKNOWN" weightage="80" keywordseo="Shashikant-Ruia">Shashikant Ruia</keyword> said on Wednesday that the group was evaluating the Nokia factory, confirming the conglomerate's interest as reported by ET on March 18. Nokia, which was once the largest handset maker in the world, said, "Discussions with a prospective buyer are at an advanced stage, and any delays would have the inevitable effect of scaring away the prospective buyer, apart from creating further negative sentiment in the broader investor community." 
 The letter, which has been copied to several departments, added that the deadlock will further devalue the asset — currently pegged at Rs 350-450 crore — and slash eventual revenue for the government. Nokia Corp is not a guarantor for <keyword id="1633700" type="COMPANY" weightage="80" keywordseo="Nokia-India-Pvt-Ltd">Nokia India Pvt Ltd</keyword>'s liabilities and is not in a position to accept becoming one as a consequence of this transaction, the Helsinkibased-firm said. 
 The company said the tax department's guarantee demand is the same one that forced Nokia to keep it out of the $7.5-billion global sale of its devices business to <keyword id="10387" type="CITY" weightage="80" keywordseo="Microsoft">Microsoft</keyword> in April 2014. This led to the closure of the plant and rendered about 8,000 direct employees and thousands of indirect workers jobless.

Know how the Income Tax authorities are creating an obstacle in its bid to sell its Tamil Nadu plant

Mobile handset manufacturing giant <keyword id="6354716" type="CITY" weightage="100" keywordseo="Nokia">Nokia</keyword>, which has extensive India business, has alleged that India's tax claims against the Finnish firm’s subsidiaries don't comply with its bilateral pact with <keyword id="6374076" type="COUNTRY" weightage="60" keywordseo="Finland">Finland</keyword> and has threatened to file an international arbitration in case the issue is not settled amicably. 
 “India's decision to change tax laws with retrospective effect and substantial tax claims against Nokia subsidiaries don't comply with its obligations under the <keyword id="2241526" type="UNKNOWN" weightage="100" keywordseo="India-Finland-Bilateral-Investment-Treaty">India-Finland Bilateral Investment Treaty</keyword> (BIT), and hurt the Helsinki-based firm's investments in India,” Nokia said in a letter to the Prime Minister's Office. 
 
It has now asked for negotiations under Article 9(2) of BIT to settle the tax disputes involving its manufacturing plant in Chennai. The company has also sought an appointment with the government to begin talks. In the letter, Nokia has said if an "amicable settlement" is not reached, the company has the right to "submit claims to international arbitration." 
 
"The letter seeks amicable resolution of the current tax disputes,” a Nokia spokesperson added. 
 The letter, dated April 30, was sent by the law firm Allen &amp; Overy LLP. "The Indian government has recently made certain changes to its tax legislation. In particular, in the Finance Act (2012), India retrospectively amended Section 9(1) (VI) of the <keyword id="6370810" type="UNKNOWN" weightage="60" keywordseo="Income-Tax-Act">Income Tax Act</keyword> (1961). In addition, Indian tax authorities have raised substantial tax demands against Nokia and its subsidiaries, seeking allegedly unpaid taxes, imposed freezing orders on various Nokia assets and failed to comply with various other obligations owed to Nokia's subsidiaries," the letter said. 
 
Nokia might serve the arbitration notice within three months of sending the initial letter, a source informed. 
 
"These and other measures taken by India substantially alter the legal framework for the investments that Nokia has made in India. India's actions are not in compliance with its obligations under the BIT, and they have caused serious and substantial harm to Nokia's investments," it added. 
 
India alleged Nokia had evaded taxes on software downloaded on handsets, manufactured at its Chennai unit, and demanded more than Rs 21,000 crore. 
Image: Thinkstock

Nokia May Seek International Arbitration To
Resolve Multi-billion-dollar Tax Row In India

<keyword id="2460472" type="UNKNOWN" weightage="100" keywordseo="Ajey-Mehta">Ajey Mehta</keyword>, head of <keyword id="28250" type="CITY" weightage="100" keywordseo="Microsoft-India">Microsoft India</keyword>'s mobile division, will be moving to HMD Global along with 60-70 sales and marketing staff. HMD Global is the company recently created by Microsoft to bring back Nokia-branded phones into global markets, including India. 
 As per sources, the switch would be done after Microsoft's deal to sell its feature phone business to <keyword id="6354671" type="COMPANY" weightage="100" keywordseo="Foxconn">Foxconn</keyword> and HMD closes in the second half of this year. The deal, however, doesn’t include Nokia's phone manufacturing plant based in Chennai, because it was frozen by tax authorities due to an ongoing Rs 20,000-crore tax dispute. 
 
While initially the team led by Mehta will be responsible for taking the Nokia-brand feature phones forward in India, they would later add Android smartphones to their portfolio; however, no timeline has yet been announced by the company regarding the same. 
 
<a href="http://i.huffpost.com/gen/2387880/images/o-LUMIA-INDIA-facebook.jpg">Image source</a>

Microsoft India mobile business head to move to HMD Global with his sales team

Following handset maker <keyword id="6354716" type="CITY" weightage="100" keywordseo="Nokia">Nokia</keyword>’s announcement to suspend operations at its Chennai plant operations, the Centre has said that it will look into the matter and try to ensure that such incidents do not happen again in the future. 
 "We will certainly see how best (such) matters don't occur again and we will encourage 'Make in India' campaign," Commerce and Industry Minister <keyword id="129243" type="PERSON" weightage="60" keywordseo="Nirmala-Sitharaman">Nirmala Sitharaman</keyword> said. 
 
Sitharaman, who is also the minister of state for finance and corporate affairs, was taking questions regarding Nokia announcing suspension of its plant and how it will affect the government's 'Make in India' campaign. "This is an issue specifically related to a particular company and there is an issue on that. We are seized of the matter. We will look at it," she said. 
 Yesterday, Nokia had announced to suspend production at its Chennai plant from November 1, owing to termination of mobile purchase agreement by <keyword id="10387" type="CITY" weightage="80" keywordseo="Microsoft">Microsoft</keyword> and some tax disputes. 
 
"Unfortunately, the continuing asset freeze imposed by the tax department prevents Nokia from exploring potential opportunities for the transfer of the factory to a successor to support the long term viability of the established, fully functional electronics manufacturing ecosystem," the company had said. 
 
Tax authorities allege that Nokia avoided paying taxes by wrongfully claiming an exemption on software exports.

Government Will Look Into Nokia’s Chennai Plant Issue: Nirmala
Sitharaman

Nearly 2,000 employees of <keyword id="6354716" type="CITY" weightage="100" keywordseo="Nokia">Nokia</keyword> India's Chennai facility have accepted the company’s voluntary retirement scheme (<keyword id="6362193" type="ORGANIZATION" weightage="60" keywordseo="VRS">VRS</keyword>), even as many of them are seeking help from the government in a bid to save their jobs. 
 
Senior members of the factory's labour union told Economic Times that the ‘apathy’ of the authorities forced many employees to choose the voluntary retirement scheme. However, the precise number of these employees could not be immediately ascertained. 
 
"Since nobody has offered us any help, what assurance can we give to our employees and on what basis can we ask them not to accept the VRS?" asked a senior union member, requesting anonymity. "We are still trying to get some help, some support, but nobody seems to care," he added. 
 Earlier, the company’s Chennai plant marked India’s significance as a key market and manufacturing hub for Nokia, which was once the world's largest handset-maker before being overtaken by stalwarts like <keyword id="10591" type="CITY" weightage="60" keywordseo="Samsung">Samsung</keyword> and <keyword id="6354427" type="CITY" weightage="60" keywordseo="Apple">Apple</keyword>. 
 
Due to tax disputes, the Chennai facility was left out of a global Microsoft takeover of Nokia's devices and services units. The unit has about 7,000 workers and the majority of them are women. Nokia India announced the voluntary retirement scheme last month in order to curtail its operations. "All we can share right now is that the VRS package is being offered till May 14," a Nokia spokesperson said in a statement. 
 
Nokia India has been urging its employees to take up the VRS offer, hinting that they may not be entitled to any other compensation once the offer is closed, senior members of the union said. According to them, the company has informed that it has orders for just 1.5 million handsets, which will require only about 1,300 employees. 
 
"The management has conveyed to the employees that there is no future for this facility anymore," another source added. 
Image Courtesy: Thinkstock

Nearly 2,000 Nokia Workers In Chennai
Accept VRS

Following termination of mobile purchase agreement by <keyword id="10387" type="CITY" weightage="20" keywordseo="Microsoft">Microsoft</keyword> and tax disputes, <keyword id="6354716" type="CITY" weightage="20" keywordseo="Nokia">Nokia</keyword> has announced to suspend production at its Chennai plant from November 1. 
 
"Microsoft has informed Nokia that it will be terminating the manufacturing services defined in the agreement with effect from 1 November 2014. In absence of further orders from Microsoft, Nokia will suspend handset production at the Sriperumbudur facility from 1st November," Nokia said in a statement. 
 
Nokia had started production at this plant in January 2006, and used to export the products manufactured at this plant to the Middle East, Africa, Asia, Australia and New Zealand. 
 
The Tamil Nadu government had served a Rs-2,400 crore notice to Nokia, saying that the firm had also sold products in the domestic market instead of shipping them overseas. 
 
In another tax case, the Supreme Court had ordered Nokia India to submit a Rs-3,500 crore guarantee before transferring the plant to Microsoft. 
 
"Unfortunately, the continuing asset freeze imposed by the tax department prevents Nokia from exploring potential opportunities for the transfer of the factory to a successor to support the long term viability of the established, fully functional electronics manufacturing ecosystem," the company said.

Nokia To Suspend Handset Production At Its Chennai
Plant From November 1

As India’s new Finance Minister, <keyword id="42575" type="PERSON" weightage="60" keywordseo="Arun-Jaitley">Arun Jaitley</keyword>, took the oath of office administered by President Pranab Mukherjee, one wonders if the thought crossed his mind that one of the major problems he would be facing soon is the taxmen’s battles with foreign firms – a legacy handed down by the current President when he held the finance job. 
 <keyword id="15492" type="CITY" weightage="100" keywordseo="Vodafone">Vodafone</keyword>, IBM, Nokia and Shell are just some of the foreign majors embroiled in disputes with the Indian tax authorities. The sums involved are mindboggling –Vodafone is supposed to owe in the region of Rs 20,000 crore; Nokia has been hit with a Rs 2,400 crore tax claim; IBM has Rs 6,857 crore outstanding tax notice against it and Shell has been told it needs to pay an additional Rs 5,000 crore in taxes. 
 
Corporate chieftains around the globe, who might have been thinking about investing in the country, were made to rethink. There have been other consequences and Singapore finally overtook Mauritius as the preferred destination for foreign investors to route their money through, because the former provides better legal protection in cases involving foreign tax liabilities. 
 
For many observers, the genesis of these tax wars is the Vodafone dispute. When the Supreme Court decided in favour of the telecom major on whether it owed taxes to the Indian exchequer over its acquisition of the Indian operations of Hong Kong-based Hutchison Whampoa, the then Finance Minister Pranab Mukherjee went to the unprecedented extent of revising the tax laws to introduce a retrospective liability. 
This, at a time, when India’s most important selling pitch against its ‘bigger and better’ rival China was that the rule of law and the independence of the judiciary system prevailed in the country unlike the wheeling and dealing that happened behind the bamboo curtain in China. 
 Fast forward a few years and you found India’s economy in the doldrums – recording sub-5% <keyword id="35050" type="CITY" weightage="80" keywordseo="gdp">GDP</keyword> growth. The long-term consequences of India’s tax adventurism are certainly being felt even now. The new BJP government has two courses it can pursue. One is to introduce more clarity and transparency in laws governing areas like transfer pricing and M&amp;A, which typically bedevil foreign investments. The other is to speed up the arbitration proceedings in cases like Vodafone, which got completely tangled up in the previous government’s larger dysfunction. 
 
Unfortunately, once the precedent has been set and it has been proved that the Indian government can go to the extent of changing laws retrospectively to get its way, it could be extremely difficult to convince investors that similar instances will not take place in the future. And the same applies for the industries, especially when laws like the Land Acquisition Act was pushed through by the UPA government. It is obvious that the Pandora’s Box can easily open if governments have an agenda to pursue. 
 
Meanwhile, Prime Minister Narendra Modi inherits a fragile fiscal situation and he will have to consult with Jaitley (the latter has to present the new Budget) whether making major tax concessions is possible in the present state of government finances. 
 As the BJP must have found out during its poll campaign, it is easier to make ambitious promises in the heat of the battle, like its proposal to abolish <keyword id="6354751" type="COMPANY" weightage="100" keywordseo="Income-Tax">income tax</keyword>, than implement them when the time arrives. 
 
Maverick leaders of the BJP, such as Subramanian Swamy, who went to town against the UPA’s tax terrorism, do not find a place in the new government. Instead, Jaitley’s background as a high profile lawyer might provide just the skills he needs as he tries to untangle the legal wrangles that the policies of the previous regime has left for him to deal with. 
Image: Thinkstock

Taxes
That Could Hinder India’s Growth Story

<div class="KonaFilter image-container display-table float_right"><div><div class="image">Reuters/Ilya NaymushinMen fishing at a bay of the Yenisei River in front of the city's cargo port, with the air temperature at about minus 24 degrees Celsius (minus 11.2 degrees Fahrenheit) in the Siberian city of Krasnoyarsk, Russia, on Saturday.</div></div></div>Good morning! Here's what you need to know on Monday.1. <a href="http://uk.businessinsider.com/sir-terry-wogan-has-died-2016-1" target="_blank">Iconic broadcaster Sir Terry Wogan died Sunday morning at age 77.</a> Wogan's family said he died after a "short but brave" battle with cancer.2. <a href="http://uk.businessinsider.com/ap-group-says-british-pilot-killed-by-poachers-in-tanzania-2016-1" target="_blank">Elephant poachers in Tanzania fired on a helicopter on an anti-poaching mission, killing the British pilot, a conservation group said.</a> Roger Gower was shot Friday while flying on a joint operation with Tanzanian wildlife authorities.3. <a href="http://uk.businessinsider.com/r-former-trump-campaign-staffer-files-discrimination-complaint-nyt-2016-1" target="_blank">A 26-year-old former campaign staffer for Republican presidential hopeful Donald Trump has accused the campaign of sex discrimination,</a> The New York Times reported on Sunday.4. <a href="http://uk.businessinsider.com/9-us-citizens-are-being-held-in-saudi-arabia-on-terror-charges-2016-1" target="_blank">Nine American citizens are reportedly among 33 suspects who have been detained by Saudi Arabia on terrorism charges in the past week.</a> The US embassy in the oil-rich Gulf kingdom is yet to comment on the matter.5. <a href="http://uk.businessinsider.com/amid-shaky-start-to-syria-talks-isis-claimed-blast-kills-45-2016-1" target="_blank">A triple bombing claimed by the Islamic State killed at least 45 people near the Syrian capital of Damascus on Sunday,</a> overshadowing an already shaky start to what are meant to be indirect Syria peace talks.6. <a href="http://www.businessinsider.com/r-china-shares-subdued-as-economic-news-disappoints-2016-1" target="_blank">Chinese shares got off to a halting start Monday after an official measure of activity in the giant factory sector fell to its lowest since mid-2012,</a> offering no respite from the economic drift that has dogged markets for months.7. <a href="http://uk.businessinsider.com/sajid-javid-says-google-tax-settlement-was-not-a-glorious-moment-2016-1" target="_blank">British business secretary Sajid Javid has acknowledged that the tax settlement between Google and the UK government "was not a glorious moment."</a> There has been growing criticism of the firm and the government over the deal, which was negotiated between HMRC officials and Google.8. <a href="http://www.businessinsider.com/afp-no-deal-yet-in-brexit-talks-with-cameron-eus-tusk-2016-1" target="_blank">No deal was reached between British Prime Minister David Cameron and European Council president Donald Tusk on Sunday in talks aimed at pressing the UK's case for curbing the benefits European Union migrants can claim.</a>9. <a href="http://www.businessinsider.com/r-nokia-settles-patent-dispute-with-samsung-2016-2" target="_blank">Finland's Nokia on Monday settled its patent dispute with Korea's Samsung,</a> saying the arbitration verdict would boost its patent sales by hundreds of millions of euros.10. <a href="http://uk.businessinsider.com/nigeria-asks-world-bank-for-loan-ft-reports-2016-1" target="_blank">Nigeria has asked the World Bank and African Development Bank for a $3.5 billion loan, according to the Financial Times.</a> The request comes as Africa's largest economy grapples with a $15 billion budget deficit in the wake of the oil crash.And finally ... <a href="http://uk.businessinsider.com/bill-gates-desert-island-discs-picks-2016-1" target="_blank">Here are the eight records Bill Gates said he would take with him to a desert island.</a> <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/daymond-john-strategy-shark-tank-deal-2015-11">Here's how Shark Tank's Daymond John beats out the other Sharks to score a deal</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="8zbGJyeDqhP5VKvP70bK9Outp7KWuCtR" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

The 10 most important things in the world right now

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div></div></div>Good morning! Here are 10 things you need to know in markets today.
Obama and Merkel announced unity and not much else about Ukraine. US President Barack Obama and German Chancellor Angela Merkel <a href="http://uk.businessinsider.com/obama-and-merkel-announce-unity-and-not-much-else-about-ukraine-2015-2#ixzz3RJxnbjdI">declared Monday that Russian aggression in Ukraine has only reinforced the unity of the US and Europe, as they weighed the prospects of reviving an elusive peace plan to end the conflict</a>. But the Western leaders didn't provide Ukraine with any concrete support.
Falling prices in China are pointing to an economic slowdown. China said consumer prices rose just 0.3% in January dragging the year-on-year rate of price growth down from 1.5% to just 0.8%. Chinese PPI year-on-year to January fell 4.3%, when a 3.8% drop was expected. <a href="http://uk.businessinsider.com/china-inflation-data-2015-2#ixzz3RJy82LJX">Weak demand equals no price pressure and eventually, even factoring oil's big drops, the spiral of lower prices</a>. 
Russian car sales are collapsing. <a href="http://uk.businessinsider.com/russia-car-sales-set-to-fall-2015-2#ixzz3RJyk01EW">A report from Bloomberg on Monday said car sales in Russia will probably fall 35% this year</a>, according to data from PwC. In an "optimistic forecast," car sales in Russia could fall just 25% in 2015, though with the Russian economy expected to fall into recession this year as Western sanctions, the collapse in oil prices, and the devalued ruble weigh on the Russian economy, the results could be even bleaker.
UBS just approved its biggest dividend since the crisis. UBS in 2014 posted its biggest payout to shareholders since the financial crisis, after the Swiss bank hit capital targets and changed its legal structure, which helped it to hike its dividend. <a href="http://www.businessinsider.com/r-ubs-says-trebles-dividend-for-2014-after-rise-in-quarterly-profit-2015-2#ixzz3RK2Z2zaB">Switzerland's biggest bank said on Tuesday net profit for the fourth quarter of 2014 was 963 million Swiss francs ($1.04 billion)</a>.
Citi still thinks oil could drop to $20. Ed Morse, Citi's global head of commodity research, wrote in a note: "<a href="http://uk.businessinsider.com/oil-could-fall-to-20-a-barrel-2015-2#ixzz3RJz5F8Ut">It's impossible to call a bottom point... Which could, as a result of oversupply and the economics of storage, fall well below $40 a barrel for WTI, perhaps as low as the $20 range for a while</a>."
<keyword id="6354868" type="COUNTRY" weightage="60" keywordseo="UK">UK</keyword> industrial production is coming. At 9:30 a.m. GMT, the UK's industrial and manufacturing production figures for December will be released. As it stands, production rose only 1.1% in the year to November, and economists are expecting just a 0.7% hike in the year to December.
The US has at least five more years as the world's top oil supply growth hotspot. <a href="http://uk.businessinsider.com/r-us-oil-output-party-to-last-to-2020-iea-2015-2#ixzz3RK0nJh00">The United States will remain the world's top source of oil supply growth up to 2020</a>, even after the recent collapse in prices, the International Energy Agency said, defying expectations of a more dramatic slowdown in shale growth.
Asian markets are mostly down. Japan's Nikkei closed 0.33% lower, followed down by Hong Kong's Hang Seng, which is 0.14% lower just ahead of the close. The Shanghai Composite Index is up 0.94%.
Microsoft and Samsung ended their patent battle. Microsoft and Samsung have ended their contract dispute over patents, Microsoft said in a statement on Monday. <a href="http://uk.businessinsider.com/microsoft-and-samsung-have-ended-their-contract-dispute-over-patents-2015-2#ixzz3RK2DT5bR">Microsoft sued Samsung last year in a federal court in New York, accusing Samsung of breaching a collaboration agreement by initially refusing to make royalty payments after the US company announced its intention to acquire Nokia's handset business in September 2013</a>.
The US is considering reopening opening legal proceedings against HSBC. <a href="http://www.businessinsider.com/r-us-considering-reopening-2012-hsbc-deferred-prosecution-deal-source-2015-2#ixzz3RK3VKmNr">HSBC could see its 2012 deferred prosecution deal with US authorities over anti-money laundering lapses reopened</a> as a result of separate, ongoing probes into the bank's alleged role in manipulating currency rates and helping Americans evade taxes, a US law enforcement official said on Monday.

10 things you need to know before European markets open

<div class="image-container" style="width:620px"><div class="image"></div>Yahoo Finance</div>
It was an up day for the market and most technology stocks, but not for <keyword id="6354427" type="CITY" weightage="60" keywordseo="Apple">Apple</keyword>.
Apple stock fell another 2.5% to close at $430--its lowest closing price since the stock's slide began last September.
Apple is now down almost 40% from its peak.
And for the first time in forever, anyone who has bought Apple in the past year and held it has lost money on it.
What's going on with Apple's stock? How low could it go?
On the first question, there are several things going on with Apple's stock.
Some are fundamental, having to do with changes in Apple's business.
<div class="image-container float_right" style="width:376px"><div class="image"></div>ApplePretty. But expensive.</div>Others are related to sentiment and changes in Apple's shareholder base ("Momentum" and "growth" investors are dumping the stock, on the theory that Apple's growth days are over. And as they dump it, the only folks willing to buy it are "value" investors who care deeply about price).
One of the things that is not happening with Apple's stock anymore, which many people thought was a big reason for Apple's collapse at the end of last year, is tax-related selling. Tax rates have already gone up. So anyone selling Apple now is selling it for reasons other than trying to lock in a low capital gains rate.
Here are some of the issues with Apple's stock:
<ul>
<li>First, Apple's earnings are no longer growing. On the contrary, this quarter, Apple's earnings are expected to shrink year over year. Investors don't pay a lot for the stocks of companies where earnings are shrinking.</li>
</ul>
<ul>
<li>Second, several reports have suggested that Apple has been cutting orders for this quarter for its most important product, the iPhone. Late last year, for example, according to <a href="http://www.businessinsider.com/apple-drastically-cut-its-iphone-orders-for-next-quarter-2012-12">UBS and other sources</a>, Apple cut its "build" orders for iPhone 5s from 35-40 million units to 25-30 million. There have been other reports that iPhone 5 sales are decelerating faster than expected and that Foxconn, Apple's iPhone assembler, has frozen hiring. All this suggests that sales of the all-important iPhone in the first quarter may be far lower than Wall Street has been expecting. It also suggests that the iPhone 5 has not been the colossal hit that Apple needed it to be.</li>
</ul>
<ul>
<li>Apple refreshed its entire product line last fall, and we're in the middle of what amounts to a new-product blackout period. Analysts expect that we'll get something new from Apple in March, but it's not clear what. The next iPhone, meanwhile, isn't expected until June, and it is likely to be <a href="http://www.businessinsider.com/big-screen-iphone-delayed-until-2014-2013-2">a boring minor upgrade to the already underwhelming iPhone 5</a>. (In the meantime, Samsung will have launched its new Galaxy S4). Later this year, we'll probably also get a new iPad Mini, but that won't be that exciting, either. The only potential for real excitement is a blockbuster new smartwatch (iWatch) and an amazing new Apple TV. But the latter has been expected for two years now, and it's not clear whether Apple really has a chance to do anything revolutionary or cool here.</li>
</ul>
<ul>
<li>Apple's amazingly high profit margin<a href="http://www.businessinsider.com/apple-profit-margin-2012-7"> is declining and is likely to continue to decline over the next several years</a>, as Apple's product mix shifts toward lower-margin tablets from the high-margin iPhone and the iPhone margin itself declines with the introduction of lower-priced phones. This suggests that Apple's earnings are likely to grow more slowly than revenue, in contrast to the situation for the past 5 years.</li>
</ul>
<ul>
<li>One of Apple's next revolutionary new products--a TV or TV device of some sort--always seems to be about a year away, with the expected date of release perpetually getting pushed farther into the future. Analysts are also not sure what this product will be and how it will sell. Dozens of companies have tried to reinvent TV over the last 15 years, and almost all of them have failed. Apple also appears to have met resistance from the TV content and distribution industry, which will do everything it can to preserve the status quo.</li>
</ul>
<ul>
<li>The timing of Apple's other expected revolutionary new product, a smartwatch (iWatch), is also still uncertain, and it's not clear whether consumers will actually see a need for this product. The iWatch is also likely to be relatively low-priced ($99? $199?), so the company would have to sell a boatload of them to really move the needle. The profitability of the watch is also not clear.</li>
</ul>
<ul>
<li>The smartphone market, which has driven Apple's spectacular iPhone sales over the past 5 years, is entering a new phase, in which <a href="http://www.businessinsider.com/mobile-market-share-2012-11">low-priced phones are capturing most of the market share</a>. Apple does not yet offer a low-priced phone, so it is missing out on this growth. If Apple does release a new cheap iPhone this year, as is widely expected, this will likely add to the pressure on Apple's profit margin.</li>
</ul>
<ul>
<li>Apple's competitors are catching up in smartphones and tablets (and now, possibly, in prospective TVs and watches), so Apple no longer has the leverage with distributors and consumers that it once did. Samsung and Google in particular are stealing much of Apple's thunder (and potential customers). This, too, could eventually lead to more margin pressure, as Apple is forced to cut prices to remain competitive. Apple<a href="http://www.businessinsider.com/apples-price-cut-a-symptom-of-whats-wrong-2013-2"> recently had to do this with a new Mac</a>.</li>
</ul>
<ul>
<li>Lastly, Apple really has finally entered the "post-Steve Jobs" era, and it remains to be seen how successful the company's next generation of leaders and products will be. One Apple observer, Paul Kedrosky, recently <a href="http://www.businessinsider.com/paul-kedrosky-on-what-has-gone-wrong-at-apple-2013-2">blamed Apple's inability to meet demand for its new Macs on a culture in which no one will say "no" to Apple's design teams</a>. Others dispute this, but the broader question is whether Apple's leadership team will be able to drive the company forward smoothly and aggressively without Steve Jobs.</li>
</ul>
All of these factors are likely weighing on Apple's stock.
But here's the good news:
The <a href="http://www.businessinsider.com/apples-stock-looks-cheap-2013-1">stock is now cheap</a>.
Apple is now trading at 10X trailing earnings per share.
That's not screamingly cheap. Apple could certainly get "cheaper," especially if its earnings continue to decline. In the old days (mid-1990s and earlier), hardware stocks used to trade between 8X-12X earnings, and Dell, HP, and other companies are actually trading at even lower multiples than that now. (Dell is going private at about 8X earnings. HP is trading at 5X next year's estimated EPS).
But unlike HP, Dell, et al, Apple is still a healthy company, so if Apple ever gets to 8X earnings, it will be screamingly cheap.
At 10X earnings, Apple is just cheap--cheaper, for example, than the stock market as a whole.
And Apple also has $137 billion of cash.
Factor out that cash, and the value of the business itself is actually getting close to the Dell level.
What will Apple's stock do from here?
No one knows, so don't get fooled into thinking that there's some guru out there who can tell you definitively.
Apple may release some exciting new products later this year that will get investors buzzing and cause them to pay, say, 14X for Apple's earnings instead of 10X. And that will produce a nice jump in the stock.
Or Apple may be in the early innings of a long secular decline in which it eventually becomes the equivalent of Dell (or, worse, Nokia. Or Digital Equipment Corporation.) That depressing future is entirely possible, so don't delude yourself into thinking that it isn't.
One thing we can say, though, is that, at 10X earnings, Apple looks cheap and is still in robust financial health. That means that even modest unexpected good news may drive the stock significantly higher.
(I don't buy individual stocks these days, but if Apple were to double its dividend to a 4%+ yield, I might find that irresistible. Even if Apple is in the midst of a secular decline, it will likely be able to keep paying those dividends for a good long time.)
SEE ALSO: <a href="http://www.businessinsider.com/telecoms-wont-pay-for-iphone-2012-12">APPLE MARGIN SQUEEZE: Carriers Refusing To Pay Up For The iPhone</a>

Apple Stock Just Crashed To A New Low

<div class="image-container" style="width:639px"><div class="image"></div>Yahoo Finance</div>
<keyword id="6354427" type="CITY" weightage="60" keywordseo="Apple">Apple</keyword> stock fell another 2% yesterday to close at $442. It's down again this morning.
The stock is now closing in on its lowest closing price since it peaked just above $700 in September.
Apple is now down almost 40% from its peak.
Apple's market value has now lost about $250 billion. Thanks to Apple's massive size, that's <a href="http://www.businessinsider.com/apple-stock-vs-hp-and-research-in-motion-2012-12">more money than investors in Hewlett-Packard and Research In Motion have ever lost in those two stocks combined</a>.
Of course, Apple has only fallen to a level that it first breached in January last year. So long-term Apple investors are still in the money. At least for now.
(For the first time in forever, though, anyone who has bought Apple in the past year and held it has lost money on it).
What's going on with Apple's stock? How low could it go?
On the first question, there are several things going on with Apple's stock.
Some are fundamental, having to do with changes in Apple's business.
<div class="image-container float_right" style="width:376px"><div class="image"></div>ApplePretty. But expensive.</div>Others are related to sentiment and changes in Apple's shareholder base ("Momentum" and "growth" investors are dumping the stock, on the theory that Apple's growth days are over. And as they dump it, the only folks willing to buy it are "value" investors who care deeply about price).
One of the things that is not happening with Apple's stock anymore, which many people thought was a big reason for Apple's collapse at the end of last year, is tax-related selling. Tax rates have already gone up. So anyone selling Apple now is selling it for reasons other than trying to lock in a low capital gains rate.
Here are some of the issues with Apple's stock:
<ul>
<li>First, Apple's earnings are no longer growing. On the contrary, this quarter, Apple's earnings are expected to shrink year over year. Investors don't pay a lot for the stocks of companies where earnings are shrinking.</li>
</ul>
<ul>
<li>Second, several reports have suggested that Apple has been cutting orders for this quarter for its most important product, the iPhone. Late last year, for example, according to <a href="http://www.businessinsider.com/apple-drastically-cut-its-iphone-orders-for-next-quarter-2012-12">UBS and other sources</a>, Apple cut its "build" orders for iPhone 5s from 35-40 million units to 25-30 million. There have been other reports that iPhone 5 sales are decelerating faster than expected and that Foxconn, Apple's iPhone assembler, has frozen hiring. All this suggests that sales of the all-important iPhone in the first quarter may be far lower than Wall Street has been expecting. It also suggests that the iPhone 5 has not been the colossal hit that Apple needed it to be.</li>
</ul>
<ul>
<li>Apple refreshed its entire product line last fall, and we're in the middle of what amounts to a new-product blackout period. Analysts expect that we'll get something new from Apple in March, but it's not clear what. The next iPhone, meanwhile, isn't expected until June, and it is likely to be <a href="http://www.businessinsider.com/big-screen-iphone-delayed-until-2014-2013-2">a boring minor upgrade to the already underwhelming iPhone 5</a>. (In the meantime, Samsung will have launched its new Galaxy S4). Later this year, we'll probably also get a new iPad Mini, but that won't be that exciting, either. The only potential for real excitement is a blockbuster new smartwatch (iWatch) and an amazing new Apple TV. But the latter has been expected for two years now, and it's not clear whether Apple really has a chance to do anything revolutionary or cool here.</li>
</ul>
<ul>
<li>Apple's amazingly high profit margin<a href="http://www.businessinsider.com/apple-profit-margin-2012-7"> is declining and is likely to continue to decline over the next several years</a>, as Apple's product mix shifts toward lower-margin tablets from the high-margin iPhone and the iPhone margin itself declines with the introduction of lower-priced phones. This suggests that Apple's earnings are likely to grow more slowly than revenue, in contrast to the situation for the past 5 years.</li>
</ul>
<ul>
<li>One of Apple's next revolutionary new products--a TV or TV device of some sort--always seems to be about a year away, with the expected date of release perpetually getting pushed farther into the future. Analysts are also not sure what this product will be and how it will sell. Dozens of companies have tried to reinvent TV over the last 15 years, and almost all of them have failed. Apple also appears to have met resistance from the TV content and distribution industry, which will do everything it can to preserve the status quo.</li>
</ul>
<ul>
<li>The timing of Apple's other expected revolutionary new product, a smartwatch (iWatch), is also still uncertain, and it's not clear whether consumers will actually see a need for this product. The iWatch is also likely to be relatively low-priced ($99? $199?), so the company would have to sell a boatload of them to really move the needle. The profitability of the watch is also not clear.</li>
</ul>
<ul>
<li>The smartphone market, which has driven Apple's spectacular iPhone sales over the past 5 years, is entering a new phase, in which <a href="http://www.businessinsider.com/mobile-market-share-2012-11">low-priced phones are capturing most of the market share</a>. Apple does not yet offer a low-priced phone, so it is missing out on this growth. If Apple does release a new cheap iPhone this year, as is widely expected, this will likely add to the pressure on Apple's profit margin.</li>
</ul>
<ul>
<li>Apple's competitors are catching up in smartphones and tablets (and now, possibly, in prospective TVs and watches), so Apple no longer has the leverage with distributors and consumers that it once did. Samsung and Google in particular are stealing much of Apple's thunder (and potential customers). This, too, could eventually lead to more margin pressure, as Apple is forced to cut prices to remain competitive. Apple<a href="http://www.businessinsider.com/apples-price-cut-a-symptom-of-whats-wrong-2013-2"> recently had to do this with a new Mac</a>.</li>
</ul>
<ul>
<li>Lastly, Apple really has finally entered the "post-Steve Jobs" era, and it remains to be seen how successful the company's next generation of leaders and products will be. One Apple observer, Paul Kedrosky, recently <a href="http://www.businessinsider.com/paul-kedrosky-on-what-has-gone-wrong-at-apple-2013-2">blamed Apple's inability to meet demand for its new Macs on a culture in which no one will say "no" to Apple's design teams</a>. Others dispute this, but the broader question is whether Apple's leadership team will be able to drive the company forward smoothly and aggressively without Steve Jobs.</li>
</ul>
All of these factors are likely weighing on Apple's stock.
But here's the good news:
The <a href="http://www.businessinsider.com/apples-stock-looks-cheap-2013-1">stock is now cheap</a>.
Apple is now trading at 10X trailing earnings per share.
That's not screamingly cheap. Apple could certainly get "cheaper," especially if its earnings continue to decline. In the old days (mid-1990s and earlier), hardware stocks used to trade between 8X-12X earnings, and Dell, HP, and other companies are actually trading at even lower multiples than that now. (Dell is going private at about 8X earnings. HP is trading at 5X next year's estimated EPS).
But unlike HP, Dell, et al, Apple is still a healthy company, so if Apple ever gets to 8X earnings, it will be screamingly cheap.
At 10X earnings, Apple is just cheap--cheaper, for example, than the stock market as a whole.
And Apple also has $137 billion of cash.
Factor out that cash, and the value of the business itself is actually getting close to the Dell level.
What will Apple's stock do from here?
No one knows, so don't get fooled into thinking that there's some guru out there who can tell you definitively.
Apple may release some exciting new products later this year that will get investors buzzing and cause them to pay, say, 14X for Apple's earnings instead of 10X. And that will produce a nice jump in the stock.
Or Apple may be in the early innings of a long secular decline in which it eventually becomes the equivalent of Dell (or, worse, Nokia. Or Digital Equipment Corporation.) That depressing future is entirely possible, so don't delude yourself into thinking that it isn't.
One thing we can say, though, is that, at 10X earnings, Apple looks cheap and is still in robust financial health. That means that even modest unexpected good news may drive the stock significantly higher.
(I don't buy individual stocks these days, but if Apple were to double its dividend to a 4%+ yield, I might find that irresistible. Even if Apple is in the midst of a secular decline, it will likely be able to keep paying those dividends for a good long time.)
SEE ALSO: <a href="http://www.businessinsider.com/telecoms-wont-pay-for-iphone-2012-12">APPLE MARGIN SQUEEZE: Carriers Refusing To Pay Up For The iPhone</a>

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