Finance Minister Nirmala Sitharaman reveals government is investigating multiple Chinese smartphone makers for tax evasion

• Finance Minister Nirmala Sitharaman has revealed that the government is investigating multiple Chinese smartphone makers for tax evasion.
• Xiaomi, Oppo, and Vivo have come under the scanner of Indian agencies.
• Here’s everything you need to know about the allegations against Chinese smartphone makers.

Chinese smartphone makers occupy a huge share of the Indian market, and companies like Xiaomi, Oppo, and Vivo are among the leading smartphone makers in the country.

Over the past few months, Chinese smartphone makers have come under the scanner of the country’s financial watchdog, the Enforcement Directorate (ED), and other agencies.

Finance Minister Nirmala Sitharaman has confirmed that the government is investigating Xiaomi, Oppo, and Vivo. This was in response to a question raised by the Bharatiya Janata Party’s Sushil Modi in the Rajya Sabha.

Oppo

Oppo had come under the scanner of the Directorate of Revenue Intelligence (DRI), the country’s apex anti-smuggling agency for customs duty evasion.

"The Department of Revenue Intelligence (DRI) has issued notice to Oppo, the mobile company, for a total customs duty of ₹4,389 crore, and these are on the grounds of misdeclaration of certain goods, leading to a short payment in customs duty. That duty evasion, we think, is about ₹2,981 crores," Finance Minister Nirmala Sitharaman said in the Rajya Sabha.

In addition, the government has also claimed that Oppo has under-valued certain imported goods, for which it is liable to pay an additional ₹1,408 core, taking its total liability to ₹4,389 core.

"As regards the under-valuation of imported goods for the purpose of payments of customs duty, that we think is an evasion of ₹1,408 crore. So, that is for Oppo. Voluntarily, they have come about to deposit ₹450 crore, much against the total that is running in ₹4,389 crore. That is the demand. They have given only ₹450 crore," Sitharaman added.

This means Oppo is still liable to pay ₹3,939 core. In an earlier statement to Business Insider India, Oppo revealed that the company has a different view on the allegations and will work with the government to solve the issue.

Xiaomi

Xiaomi India has also been under the scanner of the ED for quite some time. The agency earlier summoned the company’s former India managing director Manu Kumar Jain.

Speaking about Xiaomi, Sitharaman added, “Three showcause notices have been issued to them, and their approximate duty liability is about ₹653 crore. For the three show-cause notices which have been issued, they have deposited only ₹46 lakh.”

The ED had claimed that Xiaomi India had illegally remitted ₹5,551.27 crore to three foreign entities. Xiaomi had claimed that this amount was actually paid for royalties. A source had earlier revealed to Business Insider India that over 80% of these remittances were made to the Qualcomm Group.

Vivo

Vivo came under the scanner of the ED in July 2022 after the agency raided 44 locations belonging to the company and its associates. The ED had claimed that Vivo had transferred nearly $8 billion to its parent company in China over five years to evade taxes.

“The third company is Vivo India, for whom also there is a demand notice given for ₹2,217 crore, against which they have deposited ₹60 crore as a voluntary deposit. Of ₹1,25,000 crore, which is the total sale, Vivo has transferred through these 18 companies a huge amount of funds, and it is believed that Vivo India has, in turn, remitted ₹62,000 crores to its parent company, which is outside India," Sitharaman added.

The above numbers reveal that Vivo transferred nearly a half of its revenue to its parent company in China.

The investigations began after the Income Tax department conducted a massive raid in December 2021 at 15 locations of several companies such as Oppo, Xiaomi and OnePlus.
SEE ALSO:

Vivo's offices caught with 2 kilo gold bars after sending ₹62,000 crore back to China – all you need to know on the ED probe

Oppo comes under DRI scanner for alleged customs duty evasion of ₹4,389 crore

EXCLUSIVE: 84% of the ₹5,551.27 crore of the alleged illegal remittance by Xiaomi India were to the Qualcomm Group