Finance Minister Nirmala Sitharaman, on Tuesday (2nd Aug’22), informed the Indian parliament that they have served notices to the three Chinese smartphone companies for tax evasion.
The three top Chinese players include Oppo, Vivo (part of BBK electronics), and Xiaomi, the market leader in the Indian smartphone market.
Nirmala Sitharaman said that the Government is looking into tax evasion by the Chinese mobile companies on account of underreporting of custom duties.
There are tax evasion issues on account of two reasons:
- Under-reporting the value of imported goods.
- Mis-reporting of the number of goods that the Chinese companies import.
The alleged companies have underreported the value of goods they have imported into the country from China and hence caused the loss of tax for the Indian government.
Oppo Tax Evasion Case
Department of Revenue Intelligence (DRI) has issued a notice of Rs. 4,389 Crore to the mobile manufacturer Oppo for mis-declaration of smartphones and other goods that they imported into India.
Finance Minister also said that the company has done undervaluation of the imported products that have amounted to tax evasion of Rs. 1408 Crores.
The minister also informed the parliament that Oppo has deposited Rs. 450 Crore, which is about 10% of the demanded amount of Rs. 4,389 crores by the department of revenue intelligence.
Vivo Tax Evasion Case
Vivo India is need to pay Rs 2217 Crores due to tax evasion, out of which the company has submitted Rs 62 crores to the Indian tax authorities.
The Finance minister also shared that Vivo has remitted close to 0.62 Lakh crore to China from about 1.2 lakh crore sales in India between 2017 and 2021.
Xiaomi Tax Evasion Case
Five cases are registered against Xiaomi India because of tax evasion. The Chinese firm is required to pay Rs. Six hundred fifty-three crores, and the company has deposited just Rs. 46 lakhs so far.
Xiaomi India also transferred Mr. Manu Kumar Jain, the long-standing CEO, to a global role last year. Some of the rumors suggest that this may be about the tax evasion by the company.
Tax Evasion Case by Oppo, Vivo, Xiaomi
Considering the above numbers, Oppo is liable to pay a considerable sum of money to the Indian tax authorities, and similarly, Vivo has a huge pending tax liability. Xiaomi India has a lesser liability and may still be in a better position if the tax authorities start the recovery process more rigorously.
On the other hand, Samsung has no such worries and may benefit from the situation. The company may be able to improve its focus on sales and marketing efforts considering the Chinese rivals are busy dodging the tax authorities.
The three top Chinese players are suddenly finding the Indian market an even harder nut to crack, considering the swift competition and stricter tax scrutiny.
Also, the Indian Government has recently removed the BGMI (Battlegrounds India). The Chinese company Tencent (Krafton) made the famous mobile game after the Indian authorities banned PUBG. The Google Playstore and Apple App Store have removed the game after the Indian government notified them. The authorities have shown concern about the data sharing with China by the said Apps and Games.
Source – Hindustan Times Mint