India Accuses Kia Of Evading Taxes Of $155 Million, Carmaker Denies Charge: Report

South Korean automaker Kia has been accused by India of $155 million tax evasion through import misclassification.

The government has sent a notice to Kia's India unit over evasion of taxes.

Source : PTI

India has accused South Korean carmaker, Kia of evading taxes of $155 million by missclassifying component imports, reported Reuters quoting a document and two sources. 

The latest conflict comes in a series of such rifts between a foreign automaker with New Delhi over tariffs. 

Kia, which has denied the charges, has Hyundai and Maruti Suzuki as competitors in the world's third-largest auto market with roughly 6 per cent market share making 4 million units a year. Kia Seltos and Soner SUVs are the company's top sellers. 

The development also comes two days after German automaker Volkswagen sued Indian authorities to quash an "impossibly enormous" tax demand of $1.4 billion. 

Kia's Indian unit was sent a confidential notice by tax officers in April last year flagging alleged tax evasion of 13.5 billion Rupees, as per the government notice reported by Reuters. 

As per the notice, the offence stemmed from the incorrect declaration of imports of components for the assembly of the carmaker's luxury Carnival minivan. 

Reacting to the notice, Kia India said in a statement to Reuters that it made "a detailed response, supported by comprehensive evidence and documentation to substantiate" its stand and the authorities were still reviewing the matter.

Kia India is committed to complying with all regulations and has "consistently cooperated with" authorities, it added.

The government further said in its 432-page notice that the carmaker's Carnival "car model was being imported in parts of components in separate lots" via different ports, with the "intent to discharge lesser customs duty".

The notice, issued by a Chennai customs commissioner, further alleged that the automaker devised the strategy to ensure the imports "could not (be) detected by customs." 

As per the report, Kia's case was similar to that of Volkswagen which has been accused of evading a higher tax of 30 per cent to 35 per cent applicable on parts imported in "completely knocked down" or CKD form in a single shipment, instead shipping separate parts over days, making them eligible for a tax rate of just 10% to 15%.