Chinese smartphone giant Xiaomi told by India to pay US$88 million in import taxes
- The local unit of the Beijing-based manufacturer said it is communicating with Indian authorities to agree on the actual amount owed
- The case shows that global companies should pay more attention to local tax rules, as governments face budget pressure to boost tax income, said expert
The Indian government has demanded Xiaomi pay import taxes it allegedly owes, in the Chinese smartphone maker’s latest run-in with authorities in the South Asian nation.
Xiaomi confirmed on Thursday that its local unit has been asked by India’s finance ministry to pay 6.53 billion rupees (US$87.8 million) in import taxes. The company, however, insisted that it operates legally worldwide.
In a statement, Xiaomi said it has yet to agree with Indian authorities on the past-due amount, and communications are still ongoing.
It added that the issue was caused by “different opinions on the price determination of imported goods”, such as whether patent licence fees and other royalties should be included in the price of imported products.
According to an investigation by India’s Directorate of Revenue Intelligence, Xiaomi India paid royalties and licence fees to Qualcomm USA and Beijing Xiaomi Mobile Software Co Ltd, but did not add them to the total transaction value of its imports, Reuters reported.
The Beijing-based gadget manufacturer said that the royalties in question relate to transactions made between April 1, 2017 and June 30, 2020, which had nothing to do with Xiaomi’s current business in India.