Xiaomi Expresses Concern Over Investigations In India That Might Impact Its Financial Flows

Xiaomi, the Chinese smartphone maker, said on Friday that the ongoing investigations and allegations in India could take a long time to resolve, and that the business could receive verdicts or enter into "settlements that may adversely affect its operating results or cash flows." 
The corporation, which reported a 20% reduction in global revenues to $10.31 billion in the second quarter, stated that "it is not realistic to calculate" the financial implications of the India probes "at this stage." 

"The management examined the aforementioned Xiaomi India matters, taking professional advisers' opinions into account, and concluded Xiaomi India has valid grounds to respond to the relevant Indian authorities." the group said in its quarterly financial statement. In April, the Enforcement Directorate (ED) announced that it had seized Rs 5,551.27 crore from Xiaomi India in bank accounts under the provisions of the Foreign Exchange Management Act in connection with the company's illicit overseas remittances. 

During the current Monsoon session, Finance Minister Nirmala Sitharaman informed the Rajya Sabha that the Directorate of Revenue Intelligence has lodged five charges of customs tax evasion against Xiaomi India (DRI). According to the company's quarterly results, Xiaomi India has been involved in various investigations and notifications initiated by relevant Indian authorities such as the Income Tax Department, the Directorate of Revenue Intelligence, and the Directorate of Enforcement "in relation to compliance of relevant income tax regulations, custom duties regulations, and foreign exchange regulations" since December 2021. 

On August 11, Xiaomi India received another order "in which certain of its bank deposits were continued to be restricted, alleging Xiaomi India improperly deducted certain costs and expenses, including mobile phone purchase costs and royalty fees paid to third parties as well as companies within the Group." The government is investigating allegations of tax cheating by three Chinese cellphone companies: OPPO, Xiaomi, and ZTE.