India: Chinese chambers in India urge Center to change ‘tax survey practice’ after computer research

Saying their confidence in the country is now “shaken”, two Chinese chambers in India have urged the Center to change its “tax investigation practice” and create a “non-discriminatory business” environment for Chinese companies.

It comes after the income tax department conducted research earlier this month into major Chinese mobile phone companies across the country.

Mobile phone companies such as Oppo, Xiaomi and One Plus were covered by this research, sources told ANI. More than two dozen premises were covered by the search this month.

“Recently, Chinese mobile phone companies in India have encountered unprecedented difficulties. Some companies have been suddenly checked and fined by government organizations linked to India. As a result, these companies are unable to carry out a normal production and operation, and their confidence in the development 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 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 companies in India,” the statement added.

Previously, sources had indicated that some fintech companies were also covered by this research. The CEOs of these companies were targeted by this research and they were interviewed by income tax sleuths.

Also, sources said that the research was conducted on the intelligence data on the huge tax evasion of these Chinese mobile phone companies. They remained under the radar for a long time and when the income tax department obtained concrete information on tax evasion, searches were carried out on these companies.

Earlier in August, a Chinese government-controlled telecommunications provider, ZTE, was raided. Searches were conducted at a total of five ZTE premises, including the company’s headquarters, foreign manager’s residence, general secretary’s residence, account manager and cashier.

When researching ZTE, examining the import invoices against the sales invoices shows that there was a gross profit of around 30% on the equipment trade, although the company recorded “huge” losses over the years.

The investigation revealed that the losses are accounted for by the company through fictitious expenses relating to the services it has provided. A few of these beneficiaries have been identified where substantial expenditures have been accrued over the years. These entities turned out to be non-existent at their addresses, the sources added.

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