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India says Vivo's local unit evaded over $280M in import tax

·2-min read

India's anti-smuggling agency said that phone-vendor Vivo's local unit had evaded customs duty of over $280 million, roughly a month after the country's anti-money laundering agency raided the domestic offices of the Chinese company.

The finance ministry said on Wednesday that its Directorate of Revenue Intelligence recovered "incriminating evidence indicating wilful misdeclaration in the description of certain items" imported by Vivo's India unit while conducting searches at its factories.

It resulted in "wrongful availment of ineligible duty exemption benefits" by the company, the ministry said in a press statement.

The department issued a Show Cause Notice to Vivo India after completing its investigation and demanded a custom duty amounting to over $280 million (Rs. 2,217 crores), under the Customs Act, 1962, the ministry added.

The finance ministry also stated that Vivo India "voluntarily deposited" $7.5 million as a part of its differential custom duty liability.

TechCrunch has reached out to Vivo India for a comment on the matter and will update this space when the company responds.

The latest announcement by the finance ministry follows a similar custom duty evasion case of Vivo-sibling Oppo that was made public last month. In that incident, the Indian subsidiary of the Chinese company was named for evading a custom duty of $550 million.

Last month, the Enforcement Directorate, India's anti-money laundering agency, also raided dozens of Vivo's operations and production sites across multiple states over money laundering allegations. The agency at the time seized $58.7 million from the company's 119 bank accounts.

China's embassy in India criticized the earlier move on Vivo. The embassy said such "frequent investigations" into local units of Chinese firms "impede the improvement of [the] business environment" in the country and "chills the confidence and willingness" of global businesses to invest and operate in the South Asian market.

Vivo had commented on the raid and said it was "committed to being fully compliant with laws" in the country. Similarly, Oppo responded to the customs duty evasion charge and said it would "take appropriate steps as may be needed in this regard."

Alongside Vivo and Oppo, both of which are owned by Guangzhou-based BBK Electronics, Xiaomi recently came under the government's scrutiny in India. The Enforcement Directorate recently seized $725 million from the Indian subsidiary of the Chinese company, accusing the phone-maker of violating the country's foreign exchange laws.

Xiaomi, however, refuted the charges. Its executive faced "physical violence" threats during the investigation, Reuters reported earlier. The Beijing-based company also challenged the ruling of the enforcement agency in Karnataka High Court. The decision in that case is currently pending.

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