Huawei has been accused by the Income Tax Department of sending huge sums of money even as its revenue declines. Here are the details.
Following recent cases on Chinese smartphone brands such as Xiaomi and Vivo, Huawei is currently under the scanner. The Income Tax Department has accused Huawei of sending large sums of money to its parent unit in China in the form of dividends, thereby reducing its taxable income. The IT department claimed the difference in Huawei’s declared earnings, saying that “the company repatriated Rs. 750 crore even as its sales are plummeting”.
The tax department had previously frozen Huawei’s bank accounts after conducting a search at the facility and accusing the company of tax evasion. Huawei has denied doing anything wrong and told the court that attaching the accounts without any notice affected its business. In response, the tax department described Huawei’s lawsuit as “a ploy raised on frivolous pretexts solely to obstruct departmental procedures and to avoid paying consequential taxes”.
Huawei is now accused by the IT department
The tax office also claimed that it was in possession of “incriminating documents” against the company. It also said that the company had not presented its books of accounts “to date”, so it was “impossible to determine the authenticity of the income declared by the company”.
“The ministry also said Huawei India has not granted them access to the email of Yang Yi, the chief financial officer, who has decision-making authority on transfer pricing matters. It says it is imperative to check the communications to understand the full entry of financial transactions and the reasoning behind them. But the request was denied on the grounds that the email may contain data unrelated to the company,” the Economic Times report said.