Chinese chambers in India urge Centre to change ‘tax probe practice’ after IT searches

Stating that their confidence in the country is now “shaken”, two Chinese chambers in India have urged the Centre to change its “tax probe practice” and create a “non-discriminatory business” environment for Chinese firms.

This comes after the Income Tax department earlier this month conducted searches on leading Chinese mobile companies across the country.

Mobile companies including Oppo, Xiaomi and One Plus were covered in this search, sources told ANI. More than two dozen premises were covered in the search this month.

“Recently, Chinese mobile phone companies in India have encountered unprecedented difficulties. Some companies have got sudden check and fined by the Indian related government organizations. As a result, these companies are unable to carry out normal production and operation, and their confidence in developing in India is shaken,” read the statement sent to China’s Global Times.

This statement was issued by the Chinese Chambers of Commerce in India and the India-China Mobile Phone Enterprise Association.

“Therefore, We do hope that the Indian side will change the above-mentioned practices, treat foreign investors equally, and actively create an open, fair and non-discriminatory business environment for all Chinese funded enterprises in India,” the statement added.

Earlier, sources had toldthat some fintech companies were also covered in this search. Chief Executive Officers of these companies were covered in this search and they were interrogated by the Income Tax sleuths.

Further, sources informed that the search was conducted on the intelligence inputs of huge tax evasion by these Chinese mobile firms. They were under the radar for a long time and when the income tax department got concrete intelligence of tax evasion then raids were conducted on these companies.

Earlier in August, a Chinese government-controlled telecom vendor, ZTE was searched. Searches were conducted at a total of five premises of ZTE, including the corporate office, the residence of the foreign director, the residence of the company secretary, the account person and the cash handler of the company.

During the search on ZTE, the examination of import bills vis-a-vis sale bills shows that there was a gross profit of approximately 30 per cent on the trading of the equipment, though the company had been booking “huge” losses over the years.

Investigation revealed that the losses are being booked by the company through bogus expenses in respect of services provided by it. A few such recipients have been identified in whose case substantial expenses have been booked over the years. These entities have been found to be non-existent at their addresses, sources added. ANI