Vivo India accused of tax evasion to the tune of Rs 2,217 crore by the Directorate of Revenue Intelligence- Technology News, Firstpost

FP StaffAug 04, 2022 10:54:19 IST

A number of Chinese smartphone companies have been under the Enforcement Directorate’s radar for quite some time now. Smartphone companies like Oppo, Vivo India and Xiaomi have been accused of a number of financial irregularities and tax evasion.

The Directorate of Revenue Intelligence (DRI) has detected customs duty evasion of around Rs 2,217 crore by Chinese firm Vivo Mobile, according to an official statement they released on Wednesday.

During the course of the investigation, searches were conducted by DRI officers at 44 locations and premises, as well as the factory premises of Vivo India, which led to the recovery of incriminating evidence indicating wilful misdeclaration in the description of certain items imported by Vivo India, for use in the manufacture of mobile phones, according to a statement released by the Union Finance Ministry. Some assets were also seized during the investigation.

This improper declaration resulted in wrongful availing of ineligible duty exemption benefits by Vivo India, amounting to Rs 2,217 crore, the ministry said.

According to data from the authorities, the tax evasion allowed Vivo Mobile to transfer nearly $8 billion to its parent company in China over the course of 5 years, which works out to almost half of Vivo Mobile’s revenue.

Vivo India is a subsidiary company of Guangdong, China-based Vivo Communication Technology. The company is engaged in the business of manufacturing, assembling, wholesale trading as well as distribution of mobile handsets and accessories thereof.

A Show Cause Notice has been issued to Vivo India demanding Customs duty amounting to Rs 2,217 crore, under the provisions of the Customs Act, 1962, after the investigation was concluded, the issued statement added.

A sum of Rs 60 crore has been voluntarily deposited by Vivo India, towards the discharge of their differential duty liability.

In another set of investigations conducted by DRI, show-cause notices demanding duty of Rs 4,389 crore had been issued to Oppo Mobiles India Private Limited. 

“The Department of Revenue Intelligence (DRI) has issued notice to Oppo, the mobile company, for a total customs duty of Rs 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 Rs 2,981 crore,” Finance Minister Sitharaman said in the Rajya Sabha in response to a question by Sushil Modi.