India Demands $601M from Samsung Over Alleged Tariff Evasion
- India has ordered Samsung to pay $601 million in back taxes and penalties for allegedly misclassifying telecom imports to evade tariffs.
- The company, which supplied these components to Reliance Jio, may challenge the demand in court or a tax tribunal.
India has ordered Samsung and its executives to pay $601 million in back taxes and penalties for allegedly evading tariffs on key telecom equipment, according to a government order. The demand is among the largest of its kind in recent years.
The case centers on Samsung’s import and sale of telecom components, including a critical transmission part used in mobile towers. Authorities allege the company misclassified these imports to avoid tariffs of 10% or 20%. Samsung had received a warning in 2023 regarding the issue.
The tax demand amounts to a significant portion of Samsung's net profit in India, which stood at $955 million last year. The company has the option to challenge the ruling in a tax tribunal or court.
Samsung imports telecom equipment through its network division and has supplied these components to Reliance Jio, the telecom company owned by billionaire Mukesh Ambani.
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Samsung has indicated its intention to challenge this ruling in a tax tribunal or court, asserting that the components should not attract tariffs and that customs officials were aware of their classification practices for years. However, customs authorities disagreed, as per a confidential January 8 order which is not public but was somehow reviewed by Reuters.
Furthermore, according to Indian officials, the company imported telecom equipment worth approximately $784 million from Korea and Vietnam between 2018 and 2021 without paying the required duties.
A government official familiar with the case stated that the authorities are intensifying scrutiny of import classifications to prevent tariff evasion.
Edited by Harshajit Sarmah
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