Nokian Renkaat - Company Announcement

Nokian Tyres tax dispute proceeds. The Company is now finally in position to appeal to the Administrative Court

Nokian Tyres plc Stock Exchange Release November 7, 2016, 3.00 p.m.

The Board of Adjustment of the Finnish Tax Administration held the reassessment
decision from the Tax Administration unchanged related to additional taxes EUR
62.8 million but decreased the amount of punitive tax increases and interests
from EUR 31.3 million to EUR 26.4 million concerning tax years 2007-2010. The
decision of the Board of Adjustment was not unanimous.

The Company has already recorded the 2007-2010 total additional taxes of EUR
94.1 million in full to the financial statement and result of year 2015 based on
the Tax Administrations decisions December 2015 and January 2016.

The Company considers the decision unfounded and appeals against it by leaving
the claim to the Administrative Court.

The ruling of The Board of Adjustment of the Finnish Tax Administration does not
affect the Company's dividend policy. The ruling has no effect on the Nokian
Tyres Group’s guidance: In 2016, with the current exchange rates, net sales and
operating profit are expected to remain at the same level compared to 2015.

If the claim does not lead to annulment of the tax decision, the Group's
corporate tax rate is expected to rise in the next 4 years, from the previously
announced 17 per cent to maximum 22 per cent.

Background of the tax dispute

Large Taxpayers’ Office carried out a transfer pricing tax audit regarding tax
years 2007-2011, investigating if the intercompany transactions between Nokian
Tyres plc and its subsidiaries were concluded based on market prices.
Reassessment decision regarding year 2011 has not been received yet and the
latter years are still unaudited. Reassessment decisions concerning tax years
2007-2010 (company’s releases 30 Dec 2013 and 21 Jan 2014) contained EUR 100.3
million of additional taxes, including penalties and interests, which the
Company recorded in full to the financial statement and result of year 2013.

The Company appealed to the Board of Adjustment of the Finnish Tax
Administration, which annulled the additional payable tax imposed by the Tax
Administration and returned the matter back to the Tax Administration for
reprocessing (company’s release 7 April 2015).

In December 2015 and January 2016, the Company received renewed reassessment
decisions from the Tax Administration, according to which the Company was
obliged to pay EUR 94.1 million in additional taxes with punitive tax increases
and interest concerning tax years 2007-2010. The Company paid the amount in
January 2016. The Company recorded EUR 94.1 million in full as expenses in the
financial statement and result for 2015.

Tax Administration states in the reasoning of its decision concerning 2007-2010,
that the transfer pricing was at arm’s length with all others but the Russian
subsidiaries. They have ignored the modern and efficient production plant in
Russia combined with the sales and logistic network covering whole Russia as
basis for success of the Nokian Tyres Group’s Russian business. Tax
Administration considers the Russian plant as a low risk contract manufacturer.
The Tax Administration has ruled that a significant part of the Russian
subsidiaries' profits should be added to Nokian Tyres’ taxable income in
Finland. In practice this leads to double taxation of income, which is contrary
to existing tax treaty.

Nokian Tyres to appeal against the decision

The Company’s transfer pricing has been at arm’s length as provided by Finnish
laws and the OECD Transfer Pricing Guidelines. No appropriate grounds to justify
the disregarding of the Company’s transfer pricing documentation has been
presented. The decision of the Board of Adjustment of the Finnish tax
Administration is also based on the so-called re-characterization of legal
transactions in the sense rejected by the Supreme Administrative Court.

Nokian Tyres plc considers the decision by the Board of Adjustment of the
Finnish Tax Administration unfounded and appeals against it to the
Administrative Court. If needed, the Company will also require the competent
authorities to negotiate on the elimination of the double taxation. The Company
has initiated a separate process for evaluating the legitimacy of the procedures
used in the tax audit by Tax Administration and tax inspectors.

Nokian Tyres plc

Antti-Jussi Tähtinen
VP, Marketing and Communications

Further information:
Anne Leskelä, CFO, tel: +358 10 401 7481

Distribution: Nasdaq Helsinki Ltd, media, www.nokiantyres.com
Nokian Tyres is the world’s northernmost tyre manufacturer. The company promotes
and facilitates safe driving in demanding conditions. It supplies innovative
tyres for cars, trucks and special heavy machinery mainly in areas with special
challenges on tyre performance: snow, forests and harsh driving conditions in
different seasons. Nokian Tyres’ product development is consistently aiming
for sustainable solutions for safety and the environment, taking into account
the whole life cycle of the tyre. A part of the Nokian Tyres group, the tyre
chain Vianor has 1,494 outlets in 26 countries. In 2015 Nokian Tyres had
approximately 4,400 employees and net sales of approximately 1,4 billion euros.
Nokian Tyres’ share is listed on the Nasdaq Helsinki. Further information:
www.nokiantyres.com