December 7, 2022

Chinese companies implicated in financial malfeasance in India: report

02 March 2022 10:06 STI

New Delhi [India], March 2 (ANI): Since the Covid-19 pandemic, China has been trying to present itself as a reliable partner for economic recovery. But much like China’s vaccines that have raised questions about their effectiveness, the country’s partnership in economic recovery comes with waste, fraud and political manipulation.
Beijing has failed to act against the corruption and criminality that Chinese government-affiliated companies usually use in South Asia to gain an unfair advantage.
According to a report by India’s GST Intelligence Branch, many Chinese companies have been found involved in tax evasion. They were taking advantage of fraudulent input tax credits (ITC) from certain companies without actually receiving any goods or services. They were also charging and collecting GST from their customers and not filing the same. Some Chinese companies in collusion with Indian companies were issuing fake invoices to different Chinese companies/companies having Chinese nationals as directors without actual provision of services.
There is a long list of Chinese companies implicated in financial irregularities. In December 2021, the IT department performed research on Chinese smartphone manufacturers and vendors Xiaomi and Oppo and found that both companies had failed to comply with the regulatory mandate prescribed by the Income Tax Act 1961. on income for the disclosure of transactions with associated companies. Such breaches make them liable to penalties of up to Rs 1,000 crore.
In another case, Chinese companies involved in chemicals, ball bearings, machinery parts and injection molding machines were raided (November 2021) by the Indian Income Tax Department because they were involved in tax evasion through the manipulation of account books. Search operations covering around 20 premises across the country revealed that these companies had transferred nearly 20 crore to China through a network of fictitious entities over the past two years.

Some Chinese entities, including those that had good business in India, deliberately engaged in tax evasion, as evidenced by the case of ByteDance. Goods and Services Tax (GST) authorities froze (2020) ByteDance’s accounts for alleged tax evasion and failure to pay its GST duties in full. It emerged that Chinese nationals opened fictitious companies and bank accounts, as well as fictitious mobile phone numbers using Indian SIM cards.
The Indian government, aware of the increase in non-compliance and tax evasion, has ordered the Registrar of Companies (ROC) to set up Chinese cells across the country to investigate shell companies involving nationals. Chinese. These shell companies were apparently linked to betting, loaning, dating and online gambling apps and had raised hundreds of crores.
There are cases of money laundering by Chinese companies from India. The Enforcement Directorate (ED) arrested (2020) a cryptocurrency trader in this regard in connection with a Chinese online betting scam. Business from websites hosted outside India and operated by Chinese nationals was estimated at over Rs 1,100 crore.
Chinese companies also entered the Indian credit market and exploited Indian borrowers. During the pandemic-induced lockdown, dozens of Chinese-owned micro-lending apps started operating in India under very dodgy conditions. Claiming to be playing fair, Chinese instant loan apps Momo, CashBus, Timely Cash, Y Cash, Kissht, Robo Cash, Fast Rupee, Cash Mama and Loan Time offered payday loans to Indians, targeting low-end borrowers revenues. climb. Many of these apps boast over a million installs. Borrowers were charged exorbitant processing fees and interest rates, pushing many lower-middle-class people into debt traps and forcing them to commit suicide.
Violating local rules, Shopee, a Chinese e-commerce company, started operations under a complex corporate structure across Singapore and the Cayman Islands to deceive the Indian government about its origin. The Confederation of All Indian Traders (CAIT) complained to the competition regulator, seeking action against Shopee for alleged unauthorized entry into the country.
Estimates suggest that Beijing is also responsible for the largest illicit financial flows (IFFs) related to corrupt business practices, by value globally. It is in this context that the Indian government has started designing and implementing safeguard measures. (ANI)