Indian Tax Officials Say China’s Xiaomi Evaded nearly $88m in Import Taxes

Indian authorities have ordered the local unit of Chinese smartphone giant Xiaomi to pay $87.80 million in import taxes after an investigation found that the company had evaded some of its legal obligations.

A statement released by the Finance Ministry said that investigations found “incriminating documents” showing that the payment of royalty and license fees of Xiaomi India to Qualcomm USA and Beijing Xiaomi Software was not added to the transaction value of imports by the company and its contract manufacturers. 

“By not adding “royalty and license fee” into the transaction value, Xiaomi India was evading customs duty being the beneficial owner of such imported mobile phones, the parts, and components thereof,” the statement said.

The statement further said that three show-cause notices had been issued to Xiaomi for the tax demand and recovery of 6.53 billion rupees (S$119 million) for the period April 2017 to June 2020.

Meanwhile, a spokesperson for Xiaomi India said they “give utmost importance” to making sure the company complies with Indian laws.

“We are currently reviewing the notice in detail. As a responsible company, we will support the authorities with all necessary documentation,” the spokesperson added.

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