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Bytedance Claims Freezing Of Accounts Is Illegal, Urges Lifting Ban

Bytedance Claims Freezing Of Accounts Is Illegal, Urges Lifting Ban

An allegation by the Indian tax authorities of possible tax evasion by Bytedance had led to the company’s accounts being frozen

ByteDance urged the court to lift the freeze, saying it has robust business plans in India and does not intend to wind up

In January this year, Bytdance reduced its Indian workforce after India stood firm on the ban on its popular short video app TikTok

ByteDance has challenged the Indian government’s freeze on its bank accounts, calling it illegal and saying it amounts to harassment, according to a report by Reuters. 

The matter relates to an allegation by the Indian tax authorities of possible tax evasion by Bytedance, which led to a bar on the accounts of the company. The case is scheduled to be heard in the Bombay high court on Tuesday, April 6, 2021. 

The Beijing-based company in January this year reduced its Indian workforce after the Indian government stood firm on its ban on Bytedance’s popular short video app TikTok. The ban was imposed in June last year amid border clashes between India and China, with India claiming the app, among over 200 other apps and games, was a threat to the data sovereignty of India. Chinese government authorities as well as Bytedance officials have repeatedly criticised India over the ban and other Chinese apps.

Indian authorities had earlier blocked at least two bank accounts of Bytedance for allegedly evading taxes. The company had claimed that the freezing of its accounts will hit its operations, which had already suffered from the government’s ban on TikTok and Helo.

The tax investigation centres on potential evasion of taxes related to online advertising and other financial dealings between ByteDance India and TikTok Pte Ltd, its parent entity in Singapore. 

ByteDance Fears Adverse Impact From Accounts Freeze

In the 209-page court filing lodged on March 25, seen by Reuters, ByteDance told the court that authorities acted against the company without any material evidence and gave no prior notice, as required by law.

ByteDance, which used to have 1,300 employees in India till last year, was forced to lay off non-essential staff in the wake of the ban. The company argued that while it had only about $10 Mn in its accounts, the freezing of accounts will make it hard for it to pay salaries and taxes. 

ByteDance told the court its India workforce includes 800 people working in its “trust and safety” team that supports activities like content moderation overseas. Urging the court to lift the freeze, the company said it has robust business plans in India and does not intend to wind up. 

Besides India, TikTok has come under scrutiny in the US and Europe as well. Former US President Donald Trump had alleged that the app posed security concerns as personal data of US consumers could be breached by China’s government. TikTok has maintained that it does not share any data with the Chinese government, which is the primary fear in the US and India.

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