Xiaomi, a Chinese smartphone manufacturer, warned on Friday that the ongoing investigations and accusations in India would take a long time to resolve and that the firm might be subject to judgments or settlements that would be detrimental to its operating results or cash flows.
The corporation, which reported a roughly 20% decline in its global revenues to $10.31 billion in the second quarter of June, said that it is currently impractical to estimate the corresponding financial effects (of the India probes).
Xiaomi worried about Investigation
In its quarterly financial report, the group stated that management had examined the aforementioned issues relating to Xiaomi India and reached the conclusion that Xiaomi India had good cause to address them with the appropriate Indian authorities.
According to the Enforcement Directorate (ED), in connection with Xiaomi India’s unauthorized outside transfers, they seized Rs 5,551.27 crore from its bank accounts in April. This was done by the rules of the Foreign Exchange Management Act.
In the most recent Monsoon session, Finance Minister Nirmala Sitharaman informed the Rajya Sabha that the Directorate of Revenue Intelligence has filed five instances of customs duty evasion against Xiaomi India (DRI).
In its quarterly report, the company stated that since December 2021, Xiaomi India has been a subject of numerous inquiries and alerts sent by pertinent Indian authorities, such as the Income Tax Department, the Directorate of Revenue Intelligence, and the Directorate of Enforcement, regarding compliance with crucial income tax regulations, customs regulations, and foreign exchange regulations.
Cases of Alleged Tax Evasion
On August 11, Xiaomi India also got an order restricting some of its bank deposits because Xiaomi India had improperly deducted various charges and expenses, such as the price of mobile phones and royalties paid to outside parties as well as other Group firms.
Three Chinese mobile phone companies, OPPO, Vivo India, and Xiaomi, are the subject of investigations by the government on allegations of tax cheating. Based on a DRI probe, OPPO Mobiles India Ltd has been handed a show-cause notice requesting Rs 4,403.88 crore. The DRI also discovered Vivo India evading customs duties to the tune of over Rs 2,217 crore.
If it is truly becoming more difficult and expensive to work in the country, Chinese businesses that first intended to use India as a hub for the processing of foreign goods may choose to leave the country, the state-run Global Times said earlier this month.
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