Finishing / Fang Fengjiao
Xiaomi was again investigated by the Indian authorities.
On May 1, in response to the seizure of funds in its bank account by the Indian government, Xiaomi India issued a statement saying: "All operations of Xiaomi India strictly comply with local laws and regulations, and these royalties paid are used for the licensed technology and intellectual property rights used in the Indian version of the product." It is a legitimate business practice for Xiaomi India to pay such royalties and will work closely with the government to clarify any misunderstandings. ”
Image source: Courtesy of Xiaomi
According to the Financial Crimes Control Agency of India's previous statement, xiaomi india has been found to have remitted foreign currency worth 55.5 billion rupees (about 4.806 billion yuan) to three overseas entities, including xiaomi group, in the name of paying royalties, suspected of illegally sending money to overseas institutions, and Indian law enforcement agencies have seized about 4.8 billion yuan of assets belonging to xiaomi india.
It is reported that Xiaomi India is a wholly-owned subsidiary of China's Xiaomi Group, and the funds seized by the Indian Law Enforcement Bureau are located in the company's bank account.
Xiaomi has previously been repeatedly investigated by the Indian authorities.
Earlier this year, India's Enforcement Agency launched an investigation into illegal remittances and questioned Manu Kumar Jain, Xiaomi's global vice president. In a statement, the Indian Enforcement Agency said, "The company (Xiaomi Group) started operating in India in 2014 and has been sending remittances since 2015." The company has remitted the equivalent of INR 555.127 million in foreign currencies to three foreign entities, including a Xiaomi Group entity under the guise of royalties. The huge sums paid in the name of royalties were remitted in accordance with the instructions of its Chinese parent entity... Xiaomi India sources fully manufactured phone kits and other products from Indian manufacturers. Xiaomi India has yet to receive any services from the three foreign entities where these amounts have been transferred. Under the cover of camouflage of various unrelated documents created between group entities, the company remitted the money abroad in the name of royalties, in violation of Article 4 of FEMA (Foreign Exchange Control Act). The company also provided misleading information to banks while sending funds abroad. ”
That is to say, the Indian side believes that Xiaomi India remitted patent licensing fees and royalties related documents to Qualcomm and China's Beijing Xiaomi Mobile Software Company, which are not included in the transaction value of its imported goods, constituting tax evasion and tax evasion, and needs to be re-taxed.
In response, on January 5, Xiaomi Group responded that the Indian authorities required Xiaomi to pay back the import tax related to royalties between April 1, 2017 and June 30, 2020. "The root cause of this tax problem is that there are differences between the parties on the price determination of imported goods. Whether royalties, including patent royalties, should be included in the price of imported goods is a complex technical dilemma in all countries. ”
According to New Delhi Television (NDTV), on December 21 last year, law enforcement officers from the Revenue Department of the Ministry of Finance of India inspected taxes in more than 20 places across India, and Chinese-funded mobile phone companies such as Xiaomi and OPPO were searched, which are the more well-known mobile phone brands in India.
According to the first quarter of 2022 Indian smartphone shipment report released by market research agency Canalys, Xiaomi topped the list with 8 million smartphone shipments, with a market share of 21%.
Source: China Times synthesizes from first finance, daily economic news, public information, etc
Editor: Li Yunpeng