Chinese smartphone maker Huawei comes under the IT department’s scanner over tax evasion

• Huawei has come under the scanner of Indian agencies over tax evasion.
• The Income Tax department has accused Huawei of repatriating large amounts of money to its parent company in China.
• The department has claimed that Huawei sent the money in the form of dividends to reduce its taxable income.

Chinese smartphone maker Huawei is the latest company to come under the scanner of Indian agencies. The Income Tax (IT) department has accused Huawei India of repatriating large amounts of money to its parent company in China.

According to an Economic Times report, Huawei has been accused of repatriating large amounts of money in the form of dividends to reduce its taxable income in India.

Huawei sent ₹750 crore as dividends despite dwindling revenues

The IT department has claimed discrepancies in the income declared by Huawei in India for at least two financial years. The department has alleged that the company had remitted ₹750 crore as dividends “even when its revenue was reducing drastically”.

Huawei has been under the IT department’s scanner for quite some time now. In February, the department had frozen the bank accounts of the company after it found evidence of tax evasion during a search operation.

The Delhi High Court had summoned the chief executive officer and three executives of Huawei after a complaint was filed by the IT department claiming the company was withholding information.

“The non-compliance by the accused company and its officers had resulted in obstruction and stifling of search action of authorized officers,” the court had said in its order.

Huawei in its petition to the court had claimed that the freeze on its accounts without any notice had affected its business.

In its response to Huawei’s claims, the IT department claimed that it had "incriminating material" against Huawei and added that the company’s petition is "a ploy raised on frivolous grounds just to obstruct departmental proceedings and to avoid consequential payment of taxes".

Not the first Chinese company to come under the scanner

Huawei is not the first Chinese smartphone maker to come under the scanner of Indian agencies. Earlier this year, the Enforcement Directorate (ED) had claimed that Xiaomi had illegally remitted ₹5,551.27 crore.

After Xiaomi, Vivo came under the scanner of ED, and earlier this month, the financial watchdog revealed that the company has transferred nearly $8 billion to its parent company in China over a five year period, which amounted to around 50% of the company’s turnover during the period.

The ED is investigating violations of the Prevention of Money Laundering Act (PMLA) act by the Chinese smartphone maker.

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