This is the second big action against leading Chinese phone-makers after the agency attached more than Rs 5,500 crore in bank deposits of Xiaomi in April this year for alleged violation of the Foreign Exchange Management Act.
While Xiaomi is facing scrutiny for alleged transfer of funds outside the country without accounting for adequate income and profits here, Vivo is facing an investigation under the Prevention of Money Laundering Act and for some security-related issues in which some Chinese nationals were allegedly involved in forging identity papers.
The Income Tax department had seized various documents during search operations carried out in December involving Xiaomi, Oppo, Vivo and their distributors. The agency had found details of alleged tax evasion on income of more than Rs 6,500 crore. The I-T department had also raided Chinese telecom company Huawei in February and it claimed to have found alleged manipulation of account books for reducing taxable income in India.
Tuesday’s raids were spread across Delhi, UP, Meghalaya and Maharashtra. A Vivo India spokesperson was quoted by a news agency as saying, “Vivo is cooperating with the authorities to provide them with all required information. As a responsible corporate, we are committed to be fully compliant with the laws.”
ED’s investigation against Vivo is based on an FIR registered by the Delhi Police against a distributor of the company in J&K in connection with forgery of identity documents of some Chinese nationals. According to ED sources, the Chinese phone majors are allegedly making huge remittances to China, exaggerating expenses towards consultancy and software services while evading taxes on income made in India.
Several central agencies, including the I-T department, have been involved in scrutinising the affairs of Chinese fintech and telecom companies over the past few years. The crackdown intensified with the banning of several Chinese gaming companies in the wake of the Ladakh stand-off and Galwan Valley clashes along the Line of Actual Control.
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