Samsung Faces USD 601 Million Tax Demand Over Telecom Equipment Sold to Reliance Jio: Report

The Indian government has ordered Samsung and its executives in the country to pay USD 601 million in back taxes and penalties for allegedly misclassifying telecom equipment imports to evade tariffs, a government order reviewed by Reuters revealed. Samsung imported and sold these items to Mukesh Ambani’s telecom company, Reliance Jio.

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Investigation into Samsung

According to the report, the investigation into Samsung commenced in 2021 when tax inspectors raided its offices in Mumbai, the financial capital, and Gurugram near New Delhi. During the search, they seized documents, emails, and electronic devices. Subsequently, top executives were interrogated.

Remote Radio Head

The dispute centers on Samsung’s imports of Remote Radio Head, a key component in 4G telecom networks. From 2018 to 2021, the company imported USD 784 million worth of these units from Korea and Vietnam without paying duties, arguing they were exempt. However, customs authorities determined the component attracted tariffs of 10-20 percent and accused Samsung of knowingly submitting false documentation.

According to the report, Samsung pushed India’s tax authority to drop the scrutiny, saying the component did not attract tariffs and officials had known its classification practice for years. But customs authorities disagreed.

The component fitted on telecoms towers transmits signals and is subject to a tariff, the government said according to the report, though Samsung disagreed on how it functions.

Samsung’s Defense

Samsung vehemently defended its classification, backing its case with four expert opinions, saying the component did not perform the functions of a transceiver and could be imported without any duty, the report quoted the tax order.