Vivo’s Indian subsidiary is accused of remitting almost 50% of its turnover, amounting to Rs 62,476 crore, to parent entities in China between 2017 and 2021 in a bid to avoid paying taxes in India, according to ED, the agency that fights against financial crimes.
Citing the data found from the investigation ED claimed that the total turnover of Vivo India during the above period was nearly Rs 1.25 lakh crore.
The Enforcement Directorate (ED), in a statement, stated that these remittances were made to show huge losses in companies that are registered in India and have links with Vivo. By showing losses these companies avoided paying tax in India.
ED Raids Vivo India Offices
On July 5, 2022, ED raided Vivo India as part of a money laundering investigation and blocked 119 bank accounts connected to the company’s India business. They also seized Rs 465 crore, including FDs worth 66 crores of Vivo India, Rs 73 lakh cash, and gold bars weight 2kg.
The discloser is made by the agency after two days of conducting Pan-India raids against Vivo Mobile India Pvt. Ltd. and 23 of its associated companies. Several companies – incorporated by Bin Lou, an ex-director at Vivo, who left India in 2018 – are now under the lens of ED.
The ED claims that they have strong evidence that proves that Vivo officials used forged documents to incorporate the companies. Surprisingly, they didn’t shy away from using the address of government buildings and the home of a senior bureaucrat to register these companies.
ED also claimed that Vivo India employees, including some Chinese nationals, were not cooperative with the search procedures. They tried to remove and hide digital devices that were retrieved from the search teams.
Contradicting the ED’s allegations, Vivo stated that all authorities received full corporation from the employees, as the company is committed to complete compliance with Indian laws. According to Counterpoint Research, Vivo is one of the top smartphone makers in India, accounting for 15% of India’s smartphone market share.
Earlier today it was reported that the two directors of Vivo India fled the country immediately after the raids were conducted.
This is part of a larger effort by the central government in tightening the noose around Chinese companies accused of financial crimes such as money laundering or tax evasion while they are operating in India.
In April, the ED came down heavily on Xiaomi India, the leading smartphone maker in India. The agency seized Rs 5,551 crore worth of deposits, accusing the company of violating foreign exchange regulations.
Indian agencies have started tightening the noose around Chinese companies two years after the military stand-off between India and Chinese that is yet to be resolved completely.
China was quick to react and expressed his displeasure. It expects that India would conduct a fair investigation against Vivo, and provide a fair and non-discriminatory business environment for the Chinese companies.