On Wednesday, the Indian government accused Chinese smartphone maker Oppo of evading 43.9 billion rupees ($550 million) in import taxes.
Why it matters: The incident is the latest development in the Indian government’s investigations into Chinese tech firms with operations in the country, including Xiaomi and Vivo, which all faced tax scrutiny from the local authority earlier this year.
- This is another setback to Oppo’s international business, as the firm is also caught up in multiple lawsuits with Nokia for 4G and 5G patents and facing a sales ban in Germany.
Details: India’s anti-smuggling agency, the Directorate of Revenue Intelligence (DRI), has launched an investigation, searching and questioning members of Oppo’s local offices, according to a press release from the Indian Finance Ministry on Wednesday.
- The investigation found evidence suggesting “wilful mis-declaration” in certain items imported by Oppo India for use in mobile phone manufacturing.
- The press release also said that Oppo didn’t include patent licensing fees totaling 14.1 billion rupees that were paid to overseas companies when calculating the value of goods imported, a violation of the country’s Customs Act and Customs Valuation Rules.
- The country’s Finance Ministry issued a notice to Oppo, informing the company that it must pay customs duty amounting to 43.9 billion rupees.
- An Oppo India spokesperson told TechCrunch that the company has a “different view on the changes mentioned in the SCN (show cause notice).” Oppo is reviewing the notice and will reply to present the firm’s side, according to the spokesperson.
- Senior officials at Oppo India have already issued statements acknowledging errors and have voluntarily paid 4.5 billion rupees “as partial differential customs duty,” according to a report by Bloomberg.
- Oppo did not respond to TechNode’s inquiry for comment.
Context: In late May, India started probing the local units of two notable Chinese phone makers, ZTE and Vivo, for alleged financial improprieties, according to Bloomberg.
- India also demanded Xiaomi, another Chinese phone vendor that dominates the Indian smartphone market, pay about $88 million in import taxes in January.
- Chinese smartphone makers lead India’s market. Four out of five smartphone brands that ship most units in the country are Chinese brands: Xiaomi, Oppo’s sub-brand Realme, Vivo, and Oppo. The four brands took 63% of the Indian smartphone market in the first quarter of 2022, according to Counterpoint Research.