After Vivo, Oppo is now in trouble for evading taxes in India. As per a probe by the Directorate of Revenue Intelligence (DRI), Oppo Mobiles India Private Limited has evaded Customs duty of around Rs 4,389 crore ($551 million). "During an investigation pertaining to Oppo Mobiles India Private Limited, a subsidiary company of "Guangdong Oppo Mobile Telecommunications Corporation Ltd, China, we have detected Customs duty evasion of around Rs 4,389 crore. Oppo India is engaged in the business of manufacturing, assembling, wholesale trading, distribution of mobile handsets and accessories thereof, across India. Oppo India deals in various brands of mobile phones, including Oppo, OnePlus and Realme," said the DRI.
This mis-declaration resulted in wrongful availment of ineligible duty exemption benefits by Oppo India amounting to Rs 2,981 crore. Among others, senior management employees and domestic suppliers of Oppo India were questioned, who in their voluntary statements accepted the submission of wrongful description before the Customs Authorities at the time of import.
Investigation also revealed that Oppo India had remitted, made provisions for payment of `Royalty` and `Licence Fee` to various multinational companies, including those based in China, in lieu of use of proprietary technology/brand/IPR license etc. The said `Royalty` and `Licence Fees` paid by Oppo India were not being added in the transaction value of the goods imported by them, in violation of Section 14 of the Customs Act, 1962, read with Rule 10 of the Customs Valuation (Determination of Value of Imported Goods) Rules 2007. The alleged duty evasion by M/s Oppo India on this account is Rs 1,408 crore.
Many Chinese firms have struggled to do business in India after political tension ramped up following a border clash in 2020. India has cited security concerns in banning more than 300 Chinese apps since, and toughened rules on Chinese investment. Action against Oppo comes amid growing scrutiny of Chinese smartphone makers in recent weeks.
Last week, the Enforcement Directorate raided 48 locations of Vivo and its related entities, alleging that sale proceeds of Vivo India were transferred out of India to show losses and avoid paying taxes. Xiaomi too has been under investigation, with the agency alleging it made illegal remittances abroad "in the guise of royalty" payments.
Both companies deny any wrongdoing.
(with inputs from agencies)
