27.02.2025 12:20
Volkswagen is accused of misclassifying auto parts in India to pay lower taxes, and the government is demanding $1.4 billion in taxes from the company. The company has filed a legal challenge against these tax claims in the Bombay High Court.
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The Indian tax authorities have accused German car manufacturer Volkswagen of evading $1.4 billion in taxes by misclassifying car imports for 12 years. Officials claim that Volkswagen imported car parts in separate shipments and assembled them in India to benefit from lower tax rates. While part imports are subject to lower taxes, the import of fully assembled cars is subject to higher taxes.
OTHER CAR MANUFACTURERS ARE CLASSIFYING CORRECTLY
Officials stated that 10 car manufacturers, including Mercedes-Benz, BMW, and Hyundai, have correctly classified their imports despite bringing in parts in separate shipments. It was also noted that South Korean Kia began to classify its imports correctly after receiving a warning.
VOLKSWAGEN'S LEGAL BATTLE CONTINUES
Volkswagen has filed a lawsuit in the Bombay High Court against the Indian government's $1.4 billion tax claim, stating that this claim is "of vital importance." If found guilty, the company could be required to pay a total of $2.8 billion, including late fees and penalties. The company criticized the Indian authorities for taking 12 years to review some shipment records, while tax authorities argue that the delay is due to the company's failure to provide the necessary documents on time.
COURT DECISION AWAITED
The Bombay High Court is expected to announce its decision regarding Volkswagen's appeal in the coming days. This case serves as an important example of how prolonged legal disputes and high tax claims faced by foreign investors affect the business environment in India.
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