India Orders Chinese Smartphone Maker Xiaomi To Pay $87.8 Million In Import Duties Over Allegations Of Tax Evasion

Chinese smartphone maker Xiaomi has been ordered to pay 6.53 billion rupees, the equivalent of $87.8 million in import taxes after an investigation that began over allegations of tax evasion.

The action against Xiaomi’s local arm is not the first against a Chinese company. In 2021, India banned a total of 118 apps that had Chinese affinity on the basis of them being of risk to India’s national security.

On the Xiaomi matter, a statement from India’s Finance Ministry mentioned that the Directorate of Revenue Intelligence carried out an investigation which led to the recovery of documents during searches of the Chinese company’s India premises.

The statement read “During the investigations, it further emerged that the ‘royalty and licence fee’ paid by Xiaomi India to Qualcomm USA and to Beijing Xiaomi Mobile Software Co. Ltd., China (related party of Xiaomi India) were not being added in the transaction value of the goods imported by Xiaomi India and its contract manufacturers. By not adding ‘royalty and licence fee’ into the transaction value, Xiaomi India was evading customs duty being the beneficial owner of such imported mobile phones, the parts and components thereof”.

Xiaomi was issued three “show cause” notices after the Directorate of Revenue Intelligence completed their investigations. Xiaomi is expected to pay 6.53 billion rupees for the period between April 2017 and June 2020.

Xiaomi is yet to reply to requests for comments about the situation.

Xiaomi has made a name for itself. The company has grown from when it first came into the scene. In the middle of last year, Xiaomi overtook Apple as the world’s second-largest smartphone vendor and had 17 percent of the global market share according to a report by Canalys.