China Smartphone Maker Oppo Evaded $551m in Tax, Says India

A woman walks by an Oppo logo at a shopping mall in Shanghai, China February 21, 2019. Photo: Reuters

Chinese smartphone manufacturer Oppo evaded $551 million worth of Indian customs duty, a government statement said on Wednesday.

A probe by India’s Directorate of Revenue Intelligence found that the smartphone maker wrongfully used duty exemptions for items imported for use in mobile phone production, the statement said.

They also allege Oppo made royalty payments which were not added to the transaction value of imported goods, as required by Indian law, it added.

A notice “has been issued to Oppo India demanding [the] customs duty,” the government said.

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A spokesperson for Oppo, which is owned by China’s BBK Electronics, said the company was reviewing the notice and would respond.

“We have a different view on the charges,” the Oppo spokesperson said in a statement. “We believe it’s an industry-wide issue many corporates are working on.”

The spokesperson said: “We are going to reply the notice, presenting our side, and will be working further with the related government departments.”

The Revenue Intelligence wing has also proposed penalties on Oppo India, its employees and Oppo China, the government statement said, without elaborating.

Many Chinese companies have struggled to do business in India after political tension ramped up following a border clash in 2020. India has cited security concerns in banning more than 300 Chinese apps since, and toughened rules on Chinese investment.

Action against Oppo comes amid growing scrutiny of Chinese smartphone makers.

The federal financial crime agency, the Enforcement Directorate, last week raided 48 locations of Vivo and its related entities, alleging that sale proceeds of Vivo India were transferred out of India to show losses and avoid paying taxes.

India smartphone market leader Xiaomi too has been under investigation, with the agency alleging it made illegal remittances abroad “in the guise of royalty” payments.

Both companies deny any wrongdoing.

Reuters with additional editing by Sean O’Meara

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Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.