Samsung Electronics is pushing back against a massive tax demand from Indian authorities, which claims the tech giant wrongly labeled some of its imported telecom equipment to avoid higher taxes. The company has filed a case with an Indian tribunal seeking to cancel the demand, according to legal documents reviewed by Reuters.
Why Samsung Is Being Asked to Pay
The dispute involves a $520 million demand raised by tax officials in January. They say Samsung misclassified a specific type of mobile tower equipment when bringing it into India between 2018 and 2021. This misclassification allegedly helped Samsung avoid tariffs ranging from 10% to 20%. The gear was later sold to Reliance Jio, the telecom arm of billionaire Mukesh Ambani’s Reliance Industries.In addition to the tax demand, Indian authorities have fined seven Samsung employees a total of $81 million, bringing the overall claim to $601 million. It is unclear whether the individual employees plan to challenge the penalties.
Samsung’s Argument: They Were Not Informed
Samsung argues that Indian authorities knew about this method of importing such components for years, especially because Reliance had been warned about similar issues back in 2017. However, according to Samsung, neither Reliance nor tax officials ever alerted the company to any wrongdoing until the investigation began.
Not the Only One: Volkswagen Also Challenged a Major Tax Claim
This case makes Samsung the second major foreign company in recent months to take legal action against India’s customs and tax policies. Volkswagen is already in court fighting a record $1.4 billion demand, also related to claims of wrongly declared imports.
Broader Implications for Foreign Firms
These high-value disputes are raising concerns among global companies about India’s tax enforcement approach. Some legal experts say such cases could impact investor confidence if companies feel they are being unfairly targeted.
What Happens Next?
Samsung’s legal filing aims to get the $520 million demand thrown out. The tribunal’s decision could set an important precedent for similar import-related cases in India.
Source: Reuters.
This article is based on a Reuters report
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