Huawei accused of fraudulent acts, evading due tax

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New Delhi, Aug 25 : India has accused Chinese telecom firm Huawei of fraudulently employing a large number of Chinese workers in the country without proper work permits and also not paying applicable income tax and threatened closure of its business.

“Your concern has employed Chinese workers in India without proper work permits in large numbers, much beyond the permissible limits,” ministry of labour and employment said in a notice to the Chinese firm.

“...over and above, these expatriates are not paying applicable income tax for which they do not have immunity. This is in complete disregard to the law of the land and misuse of liberty leading to indulgence in fraudulent act,” the notice said. In the event of non-compliance and continued abuse of government regulations, the directors of the company, including the CEO, will be reprimanded by financial penalties/imprisonment and the government may ask the firm to close its business premises.

When contacted, Huawei spokesperson confirmed receipt of the notice and said, “The company strictly complies with Indian tax regulations and mandates since inception. We have been paying our statutory liabilities in terms of personal income tax and corporate income tax regularly.” The government said the employees are staying in India on business visas and residing illegally in apartments without valid resident permits for prolonged periods, abusing visa rules and convention.

The ministry has asked the company to repatriate all illegal Chinese workers from the country immediately in its own interest. The ministry has also warned the company that surprise raids can be conducted at its Indian facilities to enforce compliance any time after two weeks from the date (August 18,2008) of issue of this letter.

Ignoring this notice “will draw contempt and forces the authority to slap show cause notice and proceed with deportation and legal options,” the ministry said.

Huawei has been operating in India since 1998 when it set up its first R and D centre here followed by its marketing and sales office in 2002. The company claims to have been a preferred vendor of leading service providers like Reliance Communications, Vodafone-Essar, Bharti Airtel, BSNL and Idea.

The company also denied the allegations of Chineseworkers staying here without proper work permits and said, “Our Chinese staff who hold business visa routinely go back to headquarters once their training and customer care assignments are over and also go back for renewing their business visas.”