Volkswagen India unit faces $1.4 billion tax evasion notice, accused of misclassifying car components

From Investing.com: 2024-11-29 06:01:06

India has accused Volkswagen of evading $1.4 billion in taxes by misclassifying car components for Audi, VW, and Skoda models to pay lower import duties. Volkswagen used different shipments to avoid detection and underpaid taxes by $1.36 billion since 2012. The Indian government may impose penalties up to 100% of the evaded amount.

Volkswagen’s India unit, Skoda Auto Volkswagen India, faces a “show cause notice” demanding an explanation for tax evasion. The company is cooperating with authorities but could face penalties and interests exceeding $2.8 billion if found guilty. High taxes and legal disputes have been challenges for foreign companies in India.

Indian investigators found that Mercedes adhered to tax rules by importing completely knocked down units, unlike Volkswagen’s practice of importing individual parts to evade higher taxes. Volkswagen’s Indian facilities were searched in 2022, and executives were questioned about the company’s modus operandi in underpaying taxes.

Volkswagen placed bulk orders for car components through internal software, which then broke down orders into individual parts to pay lower taxes. The company’s logistical arrangement was dismissed as a ploy to avoid paying applicable duties. Volkswagen argued for operational efficiency but failed to justify its actions to Indian authorities.



Read more at Investing.com: Exclusive-Volkswagen India unit faces $1.4 billion tax evasion notice By Reuters