India shot again, 40 Chinese photovoltaic companies were investigated? Suspected of tax evasion? Here comes the truth

Recently, a news that "the Indian income tax department is investigating about 40 Chinese photovoltaic companies on suspicion of tax evasion" has been spreading!

After the news was released online, it began to ferment continuously in China. On October 26, according to well-known domestic media reports, an insider in the industry said: "There is indeed this matter, and it has actually lasted for nearly a month." Domestic relevant photovoltaic companies mainly assist in investigations and accept inquiries, do not involve arrests, there are no investigation results, and the new energy business of relevant enterprises is still carried out normally and has not been affected. ”

In this regard, the reporter contacted a number of people in the photovoltaic industry, and some insiders told the reporter, "There is indeed this matter, but which companies are not sure, but it seems that many have been questioned and investigated, and they came back after asking, which is very simple." India's purpose is to impose huge fines, and they did the same with Europe and the United States before, ruthlessly. ”

The reporter then also contacted a number of photovoltaic companies, of which two companies replied that the reporter currently has no photovoltaic business in India and has not received relevant investigation requests. Two other companies told reporters that they did not know much about the situation and had not heard of it.

Industry insiders and a number of photovoltaic companies responded

According to public information, foreign media reported that the Indian income tax department is investigating 40 mainstream photovoltaic companies in China, and the investigation is suspected of tax evasion, and the scope of the investigation covers the company and its Indian distributors.

The reporter's inquiry found that there were self-media on the Internet that the investigation involved an in-depth examination of the business operations, transactions, invoices and strategies of Chinese photovoltaic companies to determine their permanent establishment (PE) locations.

When a foreign business conducts business in India through a permanent establishment, it may be subject to tax on profits generated within India. However, if there is no permanent establishment, it is considered that there is no income generation and there is no tax liability in India.

The self-media article also said that a person familiar with the matter pointed out that "because these Chinese companies have employees and offices in India, but billing is not carried out in India." ”

The news of India's investigation of China's mainstream 40 photovoltaic companies spread all over the place, and soon fermented on the Internet, and the domestic financial media began to pay attention to it.

The reporter noted that on October 26, an insider in the industry replied to the first financial reporter, "There is indeed this matter, and it has actually lasted for nearly a month." Domestic relevant photovoltaic companies mainly assist in investigations and accept inquiries, do not involve arrests, there are no investigation results, and the new energy business of relevant enterprises is still carried out normally and has not been affected. ”

In order to further understand the matter, the reporter contacted a number of photovoltaic industry insiders, and some insiders told reporters, "There is indeed this matter, but as for which companies are not sure, but it seems that many companies have been questioned and investigated, and they came back after asking, which is very simple." India's purpose is to impose huge fines, and they did the same with Europe and the United States before, ruthlessly. ”

The reporter then also contacted a number of photovoltaic companies, and two companies replied to the reporter that they currently have no photovoltaic business in India and have not received relevant investigation requests. Among them, a head PV company executive told the "China Times" reporter that they have not done business in India in the past two years, and Chinese modules have to pay high tariffs in the country, so they did not do it.

At the same time, the reporter also verified the photovoltaic companies involved in the self-media article, and a leading company told the reporter that he did not understand the situation; Another leading company said it had not heard of it before.

Qi Haihan, executive vice president of Jinchen Co., Ltd., told the "China Times" reporter that there is no need to panic about this matter, because most of China's photovoltaic companies are listed companies, and the governance and finance and taxation of listed companies are very standardized.

International trade barriers are indeed on the rise

Indeed, international trade barriers do show signs of a rise.

Some analysts pointed out that Europe, the United States and India have formulated various policies to increase trade barriers, and more than 15 countries and regions have trade barriers or locally created incentives, of which more than 40% of the policies were launched in 2019.

Previously, Wang Zhenfu, deputy investigator of the Trade Remedies Investigation Bureau of the Ministry of Commerce, also mentioned, "While the global photovoltaic trade is developing well, the risks and challenges are also unprecedented." ”

India, in recent years, has also adopted a series of trade barrier measures for China's photovoltaic products exported to India.

In July 2018, India's Ministry of Finance issued a final tax order imposing a two-year safeguard tax on solar PV products (including crystalline silicon cells and modules and thin-film cells and modules) entering the country from China, Malaysia and developed countries.

In 2020, India's investigative authorities issued a final ruling extending the safeguard measures for one year and imposing safeguard taxes on products imported from China, Thailand and Vietnam. In terms of tax rate, 14.90% is levied from July 30, 2020 to January 29, 2021; 14.50% is levied from January 30, 2021 to July 29, 2021.

On May 15, 2021, India's Ministry of Commerce and Industry issued an announcement to initiate an anti-dumping investigation on photovoltaic products originating in or imported from China, Vietnam and Thailand at the application of the Indian Solar Cell Manufacturers Association (ISMA). This is India's third anti-dumping investigation against Chinese PV products.

Starting from April 2022, India imposed a basic tariff of 40% and 25% on imported photovoltaic modules and solar cells, respectively.

Until November 2022, India's Ministry of Commerce and Industry announced that it decided to terminate the anti-dumping investigation of photovoltaic cells and modules originating in or imported from China, Thailand and Vietnam in response to the application submitted by the applicant to terminate the investigation.

In fact, not only India, Europe and the United States have actually taken similar actions, as early as September 2012, the European Union announced the launch of an anti-dumping investigation of China's photovoltaic products.

In June this year, there were rumors that Chinese PV executives were taken away to Germany to participate in the 2023 Munich International Solar Technology Expo to investigate, which also caused a sensation.

Rising trade barriers, lucrative production subsidies and supportive local policies have increased production in India, Europe, Southeast Asia and the United States, but in fact, most of the increase last year was in China.

Industry insiders: India loves and hates China's photovoltaic industry

Qi Haihan further pointed out that photovoltaic companies are a bright business card in China, and they are also very industrial advantages in the world, India should always love and hate China's photovoltaic industry, India is building its own photovoltaic industry chain and ecosystem, but it is inseparable from China's photovoltaic industry. At present, the gap between the photovoltaic industry in India and China is still relatively large.

He believes that in the short term, India's photovoltaic companies for China's photovoltaic materials, advanced technology, equipment dependence is still there, is unable to get rid of Chinese photovoltaic companies, because the whole industry chain advantages of Chinese photovoltaic companies, including comprehensive cost performance and product advancement, are relatively leading in the world, Indian companies and the Indian government This behavior is to protect some local photovoltaic companies in India.

Some market participants said that India's domestic production capacity is lagging behind and needs imports to fill the gap. According to Indian government data, India imported $3 billion worth of photovoltaic panels from 2021 to 2022, 92% of which came from China.

According to public reports, some voices in India believe that excessive dependence on imports not only leads to rising costs for the photovoltaic industry, but also poses a threat to India's energy security. To this end, India chose to start with China's photovoltaic panels.

IPG China Chief Economist Bai Wenxi told the China Times that the photovoltaic industry is a rapidly developing industry in the world, and all countries are increasing investment. China is one of the big countries in the photovoltaic industry, and the investigation of its mainstream enterprises may have a certain impact on industrial development and corporate image.

However, he also pointed out that if these companies do have tax evasion, it will have a negative impact on the reputation and image of the company. At the same time, if the results of the investigation are true, these companies may also face fines and other legal consequences.

Yu Fenghui, a new financial expert and economist, told the China Times that India's investigation of photovoltaic companies will have a certain impact on economic and trade relations between China and India. PV companies are an important part of economic and trade cooperation between China and India, and for India, investigating Chinese PV companies will be regarded as a protectionist measure, so it needs to be handled carefully.

Experts generally believe that for Chinese photovoltaic companies, they should actively respond to the investigation and cooperate with the investigation of the Indian income tax department. At the same time, it should strengthen its own compliance management to ensure that the company's business behavior is legal and compliant, so as to avoid the recurrence of similar problems.

For this incident, experts also remind everyone to look at it objectively and calmly and continue to pay attention. The development prospects of the photovoltaic industry are still broad, and enterprises must abide by local laws and regulations and international rules. At the same time, China and India need to strengthen communication and cooperation in economic and trade cooperation and jointly promote the economic development of the two countries.

Responsible editor: Zhang Zipeng Chief editor: Zhang Yuning