India investigates Huawei for tax evasion allegations

India investigates Huawei for tax evasion allegations

Huawei is being investigated by India’s Income Tax Department, with authorities searching the Chinese vendor’s offices in Bangalore, Gurgaon and New Delhi.

In a statement, Huawei affirmed its belief that its “operations in India are firmly compliant to all laws and regulations” and said that it would “fully cooperate as per the rules and regulations”, adding that Huawei staff had met with Indian tax officials at its offices and that it planned to request more information from the relevant departments.

The Economic Times reported that Huawei’s offices were raided after allegations surfaced that the vendor had failed to report the transfer of royalty payments outside of India. Several other telecom firms are believed to have avoided tax in a similar manner, with the Huawei investigation forming part of a larger probe.

According to the ET, the Income Tax Department found that in many of these cases, profits were transferred overseas “through layering to the parent company under the guise of bogus expenses, royalty, share purchases and other expenses”.

ZTE has also been investigated for tax irregularities – including evasion – with the Income Tax Department searching the Chinese company’s Indian offices in August 2021. In March 2021, the Indian government issued an ‘approved suppliers’ list for 5G network equipment which omitted Chinese vendors, including Huawei and ZTE. This essentially prevents Indian operators from using the firms as suppliers.

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