India Demands Xiaomi to Pay US$88 Million for Import Duty Evasion

若离

若离

· 1月6日

The duty recovery notice was followed by Indian authority's warning that Xiaomi and OPPO could face up to US$135 million penalty for tax violation.

BEIJING, January  5 (TMTPOST)— Indian government has accused Xiaomi’s subsidiary of customs duty evasion amounted to nearly US$ 88 million.

The Directorate of Revenue Intelligence (DRI), an Indian intelligence and enforcement agency on anti-smuggling, has issued three notices to Xiaomi Technology India Private Limited (Xiaomi India) to demand the local unit of Xiaomi to pay 6.53 billion rupees (US$87.8 million) in import duty, the Finance Ministry of India said. Through its investigation, DRI found Xiaomi India evaded these taxes from January 4, 2017 to June 30, 2020 as it hadn’t added the royalty and license fee to Qualcomm USA and to Beijing Xiaomi Mobile Software Co., Ltd. to the transaction value of imported goods, and the company and its contract manufacturers undervalued imported M1 mobiles and their parts since the loyalty was excluded, according to the ministry’s statement.

Source: Visual China

 “We give utmost importance to ensuring we comply with all Indian laws. We are currently reviewing the notice in detail,” a Xiaomi spokesperson then remarked. In its response to Chinese media news outlets, Xiaomi vowed to operate in compliance with laws and regulations across the globe and keep communicating with Indian government about the duty issue. The company noted the Indian authority’s demand didn’t involve the company’s recent business for the duty alleged to recover was originated from 2017 to 2020. It said the duty issue resulted from different valuations among various parties, which is technically seemed as complex and difficult in any country of the world, and the official statement was not the final result.  

The duty recovery notice came after Indian tax authority’s recent tax violation warning against some of leading Chinese smartphone makers.

Last week, the Income Tax department announced Xiaomi and OPPO could face up to 10 billion rupees (US$135 million) penalty after its nation-wide raids revealed these two companies had remitted the royalty of more than 55 billion rupees (US$740 million) to their overseas parents, violating the regulatory mandate for transaction disclosure.

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