ED Raids 40 Locations Connected to Vivo, Other Chinese Companies in a Money Laundering Case

| Updated: July 5, 2022 4:24 pm

The Enforcement Directorate (ED) raided 40 locations in Uttar Pradesh, Madhya Pradesh, Bihar, and southern states in connection with a money-laundering prevention case involving Vivo and other Chinese firms.

According to sources, the Vivo office and the offices of a few other Chinese companies were raided.

As of now, neither Vivo nor ED officials have made any public statements. The CBI has also been investigating the case and has filed a separate FIR.

The ED announced in April that it had seized Rs 5,551.27 crore from Xiaomi Technology India Private Limited in bank accounts under the provisions of the Foreign Exchange Management Act in connection with the company’s illegal outward remittances.

The company issued a statement at the time, stating, “We carefully examined the order issued by the government authorities. We believe our royalty payments and bank statements are all legitimate and accurate. These royalties were paid by Xiaomi India for in-licensed technologies and intellectual property (IP) used in our Indian-version products. Such royalty payments are a legal commercial arrangement for Xiaomi India. We are, however, committed to working closely with government officials to clear up any misunderstandings.”

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The Income Tax Department had disclosed on March 3 that they had conducted raids against Chinese companies selling telecom products and discovered that the companies were engaging in tax evasion by using false receipts.

At that time, the I-T department had found Rs 400 crore income suppression. Throughout India and the National Capital Region, the raids were carried out during the second week of February.

The searches had shown that the Chinese companies had paid inflated amounts for technical services received from related parties outside of India. The assessee companies were unable to demonstrate the validity of the alleged technical services for which payment had been made or the basis for determining the consideration for those services.

The search action had furthermore discovered that various firms had manipulated their books of account to decrease the taxable income in India by adding various provisions for expenses, such as provisions for obsolescence, provisions for warranty, doubtful debts, and advances, etc., that have little to no sound financial justification. The groups had failed to offer any credible support for these assertions during the investigation. The company had stated that it was coordinating with the relevant authorities to clarify all misunderstandings.

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