The Enforcement Directorate of India (ED) made a huge revelation on Thursday when it announced that the tech giant Vivo has been sending its income to China to avoid paying taxes in India. A sum of about Rs. 62,476 crores has been illegally transferred to China by the smartphone maker, in order to avoid taxes. The situation has now escalated to becoming a huge money laundering rocket involving both Chinese nationals and some Indian companies.
What is the entire matter?
As far as the facts go, the amount transferred is about 50% of Vivo’s turnover of Rs. 1,25,185 crores. ED came to know about the situation after the agency got to know about 3 Chinese nationals who left India during 2018-21 and one more person from that country including around 23 companies in India. They were helped by a CA named Nitin Garg in this scam of theirs. The foreign nationals include Bin Lou (ex-director of Vivo), Zhengshen Ou, and Zhang Jie.
“These 23 companies are found to have transferred huge amounts of funds to Vivo India. Further, out of the total sale proceeds to Rs. 1,25, 185 crores, Vivo India remitted Rs. 62,476 crores or almost 50% of the turnover out of India, mainly to China,” the ED said in a statement. The remittances were made to show huge losses in Indian incorporated companies so that Vivo is able to save taxes in India. The statement by ED came out after it raided 48 locations of Vivo Mobiles India Pvt. Ltd. and its subsidiaries on July 5.
The agency said it was following all the procedures as per the law during the raid conducted under PMLA Act, but many Vivo India employees did not cooperate with the agency and tried to abscond, remove or hide devices with data, which were later retrieved by the search teams.
Recently, some Chinese companies were also accused of selling data of domestic Indian consumers to be fed into servers in China. ED claims it has seized Rs. 465 crores kept in about 120 bank accounts by various entities that are involved in this claim. It includes Rs. 73 lakh cash, 2kg gold bars, and FDs of 66 crores of Vivo India.
All this started in February when an agency filed an ECIR Report against a company associated with Vivo claiming that they are using false documents and addressed to get incorporated in Vivo.
“The allegations were found to be true as the investigation revealed that the addressed mentioned by the directors of GPICPL did not belong to them, but in fact, it was a government building and house of a senior bureaucrat,” the ED said. Similarly, ED found 22 other companies that were incorporated in Vivo to carry out duplicitous transactions.
Why is Vivo being raided?
This entire crackdown of a giant like Vivo is seen as a step by the central government to keep a check on the actions of Chinese entities in the country. The government aims to keep strict checks on such entities to avoid huge money laundering scams in India.
Political unrest between India and China is also being seen as the reason for such action against Chinese companies. This is a result of the military stand-off that has been happening for the past 2 years along the LAC in eastern Ladakh.
What does Vivo say?
Vivo on Tuesday claimed that it is a responsible corporate and it always aims to comply with all the laws of the country it operates in. No detailed clarification has been issued by the company as of now.
8th July 2022 India’s Smartphone Economy – Scams by Chinese Manufacturers supported by India’s Banking systems. Scam after Scan by Chinese Smartphone Companies in India ! Tax Evasions, Money Laundering, Illegal Money Transfers to their Parent companies in China. All with 119 Banks being involved and over 400 Chartered Accountants . Started with Xiaomi US$ 5 Billion reported in May 2022 where their India Ceo was interrogated by Authorities and he flew off to Dubai immediately with his share of the profits to enjoy a good life. Opp, Vivo, One Plus all belong to the same company. 7th July 2022 – Vivo scam over $ 8 billion – Rs. 62,476 crores and one more by Huawei of few US$ Billions. These Chinese smartphone companies have been doing all evasions in customs tariff, taxes, etc but can these companies do this without support from Banks, Chartered Accounting firms, etc. How can these funds be transferred without involvement of Banking officers – its impossible. These Chinese Companies claim to be manufacturing in India just to evade Customs tariff. Manufacturing by them is just a show. Its basically screwdriver technology which is being carried out which is very evident. Initial players in the telecom sector which ruled the roost – Micromax, Karbonn have been forgotten. What about the Indian company who manufactured Smartphones, Tablets and other IT Components for them ? SIMMTRONICS SEMICONDUCTORS – a Delhi based manufacturer – which grew into a global Top 4 leadership position and was a threat to Chinese. But then a few Chinese companies and supported by the Indian Banking sector had their way and managed to stop the growth of pioneering Indian companies including “SIMMTRONICS” which ultimately led to collapse of all smartphones which were manufactured by the Indian company. The “Make in India” program proved successful for the Chinese companies as they killed their Indian using unscrupulous tactics very well supported by Indian Banks. The Chinese companies control 100% of the Indian Smartphone economy of India and are enriching their parent companies in China by over US$ 15 Billion in last 2 years. This is a Wake-Up Call to India to understand what they did with the initial India manufacturers.