Govt Looking Into Cases Of Tax Evasion By China’s Vivo, Oppo, Xiaomi: FM Sitharaman

Finance Minister (FM) Nirmala Sitharaman on Tuesday (August 2) informed the Parliament that the government has so far issued notices to three Chinese smartphone makers for tax evasion. 

“The government is looking into cases of alleged tax evasion by three mobile companies of China”, Sitharaman was quoted as saying.

Replying to a query, the FM said that the companies in question are Xiaomi, Vivo, and Oppo.

“The Department of Revenue Intelligence (DRI) has issued a notice to mobile company Oppo for total customs duty of INR 4,389 Cr and these are on the grounds of mis-declaration of certain goods leading to a short payment in customs duty…Duty evasion we think is about INR 2,981 Cr,” Sitharaman said.

She also said that ‘undervaluation of imported goods for the purpose of payment of customs duty’ amounts to an evasion of INR 1,408 Cr. The minister also said that Oppo has voluntarily deposited INR 450 Cr against a demand of INR 4,389 Cr.

Regarding the case related to Xiaomi, Sitharaman said that five cases of customs duty evasion have been registered against the company’s Indian arm.

“Three show-cause notices have been issued to them and the approximate duty liability there is about INR 653 Cr. For the three show cause notices that have been issued, they have deposited only INR 46 Lakh,” the Minister was quoted as saying by PTI.

“Investigation by the Enforcement Directorate revealed that Vivo Mobiles India has remitted an amount of INR 0.62 Lakh Cr mainly to China and its controlled territories, out of their total sales of INR 1.25 Lakh Cr during the period July 2017 to March 2021 which works out to 49.91%,” the minister added.

A demand notice of INR 2,217 Cr has been issued for Vivo India. Of this, the Chinese smartphone major has already deposited INR 62 Cr as a voluntary deposit, the FM said.

“Besides these, the ED is looking at 18 companies that were established by the same group Vivo and there they have voluntarily remitted INR 62 Cr as deposit but the parent company outside of India has a total sales of 1.25 lakh crore,” she said.

The FM also noted that the Central Board of Indirect Taxes & Customs (CBIC) registered cases against 43 other mobile and equipment manufacturing companies between 2019 and 2022.

The statement comes a few days after Vivo India denied money laundering charges and refuted the financial terrorism charge slapped on it by the Enforcement Directorate (ED) in the Delhi High Court. Vivo India is in dock after it emerged that the smartphone maker allegedly remitted INR 62,476 Cr out of its total income of INR 1,25,185 Cr in India.

Oppo, on the other hand, is under the government lens for alleged evading tax to the tune of INR 4,389 Cr. This involves alleged misdeclaration of certain items while importing them to avail custom duty exemption.

Similarly, Xiaomi is also facing the wrath of authorities for alleged violations of foreign exchange regulations. In May, the ED sleuths seized assets of more than INR 5,551 Cr belonging to the smartphone major.