India accuses Kia of evading $155 million in taxes

Indian tax officials sent a confidential tax notice of Rs 13.5 billion to Kia Motors India in April last year.

The Indian government has accused Kia of misclassifying component imports to evade import taxes to the tune of $155 million.

According to a media report, the carmaker allegedly evaded taxes by incorrectly declaring certain components that were imported for the assembly of the Carnival MPV. Indian tax officials sent a confidential tax notice of Rs 13.5 billion to Kia Motors India in April last year.

As per the notice issued by a customs commissioner in Chennai, "(The) car model was being imported in parts or components in separate lots" via different ports, with the "intent to discharge lesser customs duty." Kia has been accused of importing more than 90% of the parts for the Carnival, constituting a car in CKD form, which attracts higher tax.

Responding to this report, Kia India said that a detailed response with evidence and documentation had already been submitted and the authorities were still reviewing the matter. If found guilty, Kia could face a hefty penalty and might have to pay up to $310 million.

Earlier, Skoda Auto VW India was also slapped with a $1.4 billion tax evasion notice for the same reason. The company has since sued the Indian authorities to quash the tax demand.

Source: Reuters