Chinese Smartphone Brand Oppo Admits to Custom Duty Evasion in India, Asked to Cough Up $550 Mln

China’s Foreign Ministry has consistently urged Chinese smartphone giants to “abide by” Indian laws and regulations. At the same time, it has asked New Delhi to provide a “non-discriminatory” business environment for Chinese companies in India.

Chinese smartphone maker Oppo has been asked by India's Directorate of Revenue Intelligence (DRI) to pay up more than $550 million after the Guangdong-headquartered company admitted to customs duty evasion in its operations in the South Asian nation, an official release from the Indian Finance Ministry stated on Wednesday.

Oppo Mobiles India Private Limited, or Oppo India, a subsidiary of the Chinese parent company, is one of the biggest smartphone brands in India and is involved in manufacturing popular mobile devices such as OnePlus and RealMe.

Indian investigators have said that they recovered “incriminating evidence” after carrying out searches at various office locations of Oppo India as well as at residences of its top executives.

The evidence indicated “wilful mis-declaration” on part of Oppo India in regard to “description of certain items” imported by the company for manufacturing phones in the country, the Indian statement read.

“This mis-declaration resulted in wrongful availment of ineligible duty exemption benefits by Oppo India amounting to $374 million (INR 2,981 crore),” the release said.

“Among others, senior management employees and domestic suppliers of Oppo India were questioned, who in their voluntary statements accepted the submission of wrongful description before the Customs Authorities at the time of import,” it claimed.

Additionally, the DRI said that Oppo India transferred another $174 million to multinational companies in China as “royalty” and “license fee,” which Indian investigators say wasn’t added to the “transaction value” of goods imported by the company.

The DRI said that hiding the royalty and license fee from the imports constitutes a violation of the federal Customs Act, 1962.

The Indian authorities said that Oppo India has already paid a sum of $56.2 million (INR 4.5 billion) out of the total $550 million penalty as a “partial differential.”

The DRI also issued a “show-cause notice” to Oppo India asking it to come up with the remaining penalty. The notice proposes penalties against the management of Oppo India as well as the parent company in Guangdong, the statement read.

Indian authorities have in recent months raided the India operations of several Chinese mobile phone makers, including Xiaomi, Vivo, and now Oppo, for evasion of taxes and custom duties.

The raid against Oppo India comes almost a week after India’s Enforcement Directorate (ED) raided the offices of Vivo India, which is backed by Guangdong-based Vivo Communication Technology Co. Ltd, for avoiding payment of taxes to the Indian government by transferring almost half of their turnover to China.

As part of its raids against Vivo India, the ED seized around 119 bank accounts, gold bars, as well as cash under the federal money laundering laws, as per an official statement.