India asks Xiaomi to pay nearly $ 88 million in import taxes

A participant holds a Xiaomi Corp dual camera device. Mi A1 at the smartphone launch in New Delhi, India on Tuesday, September 5, 2017.

Anindito Mukherjee | Bloomberg | Getty Images

India has asked the local branch of Chinese smartphone maker Xiaomi to pay 6.53 billion rupees ($ 87.8 million) in import taxes, following an investigation.

The Tax Intelligence Directorate carried out an investigation which led to the recovery of documents during searches of the premises of Xiaomi India, a press release from the Ministry of Finance said Wednesday.

“During the investigations, it further emerged that the” royalties and license fees “paid by Xiaomi India to Qualcomm USA and Beijing Xiaomi Mobile Software Co. Ltd., China (related party of Xiaomi India) were not added to the value of the transaction of goods imported by Xiaomi India and its subcontractors, ”he said.

“By not adding ‘royalties and license fees’ to the value of the transaction, Xiaomi India was escaping tariffs as the beneficial owner of these imported mobile phones, their parts and components,” the statement added.

After completing the investigation, the DRI issued three “supporting” notices to Xiaomi regarding the recovery of 6.53 billion rupees for the period between April 2017 and June 2020. These notices are a type of court order. which requires one or more of the parts. to a case to justify, explain or prove something in court.

Xiaomi did not respond to CNBC’s request for comment.

This is not the first time India has taken action against Chinese tech companies.

Last year, the South Asian nation banned 118 apps with links to China, citing national security risks. It intervened at the height of geopolitical tensions between the two countries.

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