Volkswagen-india-$1.4-billion-tax-evasion
Volkswagen India has been accused of allegedly evading $1.4 billion in taxes by paying less import duties on components for Audi, VW, and Skoda branded cars.
On September 30, 2024, the Indian government issued a 95-page notice—seen by Reuters—to Volkswagen India about evading levies by ‘mis-declaring and mis-classifying” imported car parts. According to official documents, Volkswagen would import “almost the entire” car in unassembled condition to India.
Usually, unassembled car parts that comprise almost the whole vehicle would incur a 30%-35% import tax under India’s rule for completely knocked-down units (CKD). However, VW would declare its CKDs as “individual parts,” ensuring less taxes between 5%-15%.
The Indian government initiated an investigation into Volkswagen’s alleged tax evasion. It found that the Skoda Superb, Kodiaq, VW Tiguan, and luxury cars like the Audi A4 and Q5 were imported into India, and Volkswagen paid less taxes. The investigation reported that different shipment consignments were used to evade detection and “willfully evade payment.”
“This logistical arrangement is an artificial arrangement … operating structure is nothing but a ploy to clear the goods without the payment of the applicable duty,” said the Office of the Commissioner of Customs in Maharashtra in the notice issued to Volkswagen.
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