Samsung Ordered to Pay $601 Million in Back Taxes and Penalties

NEW DELHI: In a significant development, tax authorities in India have issued a staggering $601 million (nearly Rs 5,150 crore) notice to Samsung and its executives for allegedly evading tariffs on the import of crucial telecom equipment. This demand marks one of the largest in recent years, representing a substantial portion of Samsung's net profit in India last year.

Details of the Allegations

The controversy centers around the misclassification of imports by Samsung's network division, specifically a critical transmission component used in mobile towers, to avoid tariffs of 10% or 20%. Despite Samsung's arguments that the component was not subject to tariffs and that its classification practices were long-known to officials, customs authorities upheld the allegations in a confidential order dated January 8.

Legal and Financial Implications

Samsung has been ordered to pay Rs 4,460 crore ($520 million) in unpaid taxes and a 100% penalty. Additionally, seven executives, including high-ranking officials from the network and finance divisions, face fines totaling $81 million. Samsung has stated its compliance with Indian laws and is evaluating legal options to protect its rights.

Samsung's Response

"The issue involves the interpretation of classification of goods by customs," Samsung remarked, emphasizing its adherence to legal standards and its intention to explore all avenues to safeguard its interests.