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Tax audit leaves Nokian Tyres with €27 million bill

The company claims revenue officials have misread the significance of their Russian manufacturing plant, and says they will appeal.

Nokian Hakkapeliitta SUV 5 -merkkinen autonrengas.
Image: Nokian Renkaat

A tax audit by Finnish authorities on Nokian Tyres ruled that a notable share of the profits made by the company’s Russian subsidiary must be added to Nokian Tyres’ taxable income in Finland. The payments concern the tax year 2007, and it is believed further sums may become payable when the audits on the years 2008-2011 are completed.

Nokian Vice President Anne Leskelä claims Finland’s tax office has wrongly interpreted the history of Nokian Tyres’ operations in Russia, and says the company will appeal the decision. “Our Russian operations were already in place in 2006, when the last audit was carried out. We had no warning that the Tax Administration intended to alter their interpretation. We find the outcome of this objectionable.”

Since the tax audit, the tyre manufacturer now faces a bill for 26.9 million euros.

“Nokian Tyres is a financially strong and debt-free company,” Leskelä said, “so this amount will not affect, for example, the payment of dividends or the position of our employees.”

According to Finland’s tax administration, Nokian Tyre’s transfer pricing for its Russian subsidiary was not in line with market rates.

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