On Thursday, July 7, the Enforcement Directorate (ED), which is looking into Chinese smartphone maker Vivo in connection with an alleged money laundering case, said that its Indian business transferred INR 62,476 Cr in order to evade paying taxes in India.
Vivo, a smartphone manufacturer, allegedly “illegally” transferred a staggering Rs 62,476 crore to China in order to avoid paying taxes in India, according to the Enforcement Directorate, which announced its bust of a massive money-laundering ring involving Chinese nationals and numerous Indian businesses on Thursday.
It stated that this amount represents nearly half of Vivo’s annual revenue of Rs 1,25,185 crore without specifying the exact frame of the transaction.
The federal investigation agency discovered that three Chinese nationals, all of whom “left” India during 2018–21, and another individual from that nation established up to 23 firms in India with the assistance of Chartered Accountant Nitin Garg.
The agency’s statement came a day after it conducted searches at 48 locations belonging to VIVO Mobiles India Private Ltd (Vivo India) and its 23 associate companies across the country.
“These companies are found to have transferred a huge amounts of funds to Vivo India. Further, out of the total sale proceeds of INR 1,25,185 Cr, Vivo India remitted INR 62,476 Cr i.e, almost 50% of the turnover out of India, mainly to China. These remittances were made in order to disclose huge losses in Indian incorporated companies to avoid payment of taxes in India,” the statement said.
According to the ED, it has so far impounded 119 bank accounts belonging to various Vivo-affiliated businesses, totaling INR 465 Cr. The confiscated money consists of fixed deposits of up to INR 66 Cr, gold bars weighing 2 kg, and cash worth up to INR 73 Lakh.
The ED discovered throughout the inquiry that former Vivo director Bin Lou established 18 firms in India between 2014 and 2018. Furthermore, Zhixin Wei, another citizen of China, registered 4 businesses here.
In order to avoid paying taxes in India, it was stated that these transactions were done in order to “disclose substantial losses in Indian established companies.”
The move is being viewed as a component of the Union government’s efforts to strengthen controls over Chinese entities and the ongoing crackdown on such businesses and their affiliated Indian operatives who are allegedly engaging in serious financial crimes like money laundering and tax evasion while operating here.
In the background of the prolonged military standoff between the two nations along the Line of Actual Control (LAC) in eastern Ladakh for more than two years, increased action has been taken against Chinese-backed businesses or organisations operating in India.
The agency said while it followed “all due procedures as per law” during the raids conducted under the criminal sections of the Prevention of Money Laundering Act (PMLA), it alleged “employees of Vivo India, including some Chinese nationals, did not cooperate with the search proceedings and tried to abscond, remove and hide digital devices which were retrieved by the search teams.”
After reviewing a Delhi Police FIR (registered at Kalkaji police station) from December of last year against Grand Prospect International Communication Pvt Ltd (GPICPL), its directors, shareholders, and some other professionals, the agency filed an Enforcement Case Information Report (ECIR), the ED equivalent of a police FIR, on February 3.
The Ministry of Corporate Affairs filed a police report saying that, during the company’s December 2014 establishment, GPICPL and its shareholders used “falsified” addresses and “forged” identification documents.
This business had addresses in Jammu, Gujarat, and Himachal Pradesh, including Solan (J&K). This corporation was established by the three Chinese nationals stated above, and a fourth individual, Zhixin Wei, founded four more businesses to conduct out.
