The phenomenon of tax evasion is not new in India but with Chinese companies, it is a permanent solution to make more profits by evading taxes. Now be it any company whether mobile company, social media, gaming or any other type of company they evade taxes on a regular basis. We came across many such incidents in which many Chinese companies were caught evading taxes and other illegal activities.
Huawei under scrutiny
The Income Tax Department in February conducted raids at multiple departments of the Chinese telecom company Huawei in Bengaluru, Gurugram and Delhi while investigating tax evasions. The raids were conducted days after a ban was imposed on apps with Chinese links. The government banned apps such as Tencent Xriver, Nice Video, Baidu, Garena Free Fire, and Viva video editor among others citing security reasons.
Recently, Income Tax Department has again accused Huawei’s Indian arm of repatriating a large amount to its parent company in China in the form of dividends for reducing its taxable income in India. The IT Dept stated that there were discrepancies in the income declared by Huawei Telecommunications India for at least 2 financial years. Amid Huawei’s drastic fall in revenue in India, it repatriated ₹750 crores to its parent company.
After conducting searches on its premises, the IT Dept had frozen the Chinese company’s accounts citing tax evasion as the reason. After this Huawei went to Delhi High Court for relief which it got as Delhi HC stayed the attachment of accounts and sought the department’s response. The department in its response detailed the charges against the company.
The tax department stated that the Huawei unit had not produced its books of accounts “till date” and is making it “impossible to ascertain the veracity of the income declared by the company.”
Read More: After Oppo and Xiaomi, Huawei gets caught red-handed by the IT department
But Huawei is not the only company in India whose accounts and activities are under scrutiny in India. Companies like Xiaomi, Vivo, Oppo, and OnePlus among others are under the scrutiny of Indian watchdogs such as the Enforcement Directorate which probes money laundering.
Illegal activities of various Chinese companies in the past
In the past, we have seen many Chinese companies involved in tax evasions and multiple other illegal activities.
ZTE
ZTE is one of the largest telecommunication equipment manufacturers in China which is headquartered in Shenzhen, Guangdong. The IT Dept in the past has raided ZTE’s Gurgaon-based corporate offices and residences of senior executive officials. As per the reports, corporate office and residences of Foreign Director, Accounts person, Company Secretary and cash handler of the firm’s subsidiary in India.
According to an ET report, ZTE also allegedly had links with Gurugram-based hotel, Star Spring, through which over 1000 pre-activated Indian sim cards were exported to China and these sim cards re-entered India via few Chinese nationals. Four Chinese nationals were also arrested in the case.
Read More: After India’s action against Xiaomi, China sings songs of obedience and compliance
XIAOMI
As per Reuters, along with ZTE and Huawei, the Income Tax department had also raided the premises of Xiaomi Corporation while freezing $478 million worth of deposits in Xiaomi’s Indian bank accounts. The raids were conducted as a part of an ongoing investigation regarding tax evasion.
Xiaomi also challenged separately a block imposed by the financial watchdog ED on $725 million of its funds for alleged illegal remittances.
Read More: Xiaomi booked under FEMA Act
VIVO
Another Chinese smartphone maker VIVO has landed in the hot soup yet again as the Enforcement Directorate has accused it of violating the Prevention of Money Laundering Act (PMLA). The financial watchdog has conducted raids on 44 premises of VIVO and its associates across Bihar, UP, MP, Punjab, Haryana and several other states all over the country. The approximate value in the investigation is $8 billion (₹ 62,476 crores) which is allegedly being remitted illegally to China. The ED has blocked over 100 accounts of the Chinese smartphone manufacturer for remitting the ₹ 62,476 crore rupees to its parent company in China to avoid paying taxes, additionally, 2 kg gold bars are also being caught in one of its offices.
As one can see the stark similarities in the working of Chinese companies, the Indian govt. should take proactive measures to stop this immediately and mechanisms should be in place to make sure these types of incidents don’t happen in the first place.
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