HP’s woes continue with $325m Indian tax evasion claim.

Information Age reports:

Hewlett-Packard’s difficult year continued this week when India’s Directorate of Revenue Intelligence accused the IT giant of customs duty evasion to the tune of Rs 1,450 crore ($325 million).

The company has strenuously denied what the Times of India describes as “the biggest customs duty evasion by any company in India”, saying it will challenge the allegations ‘through the judicial process’.

The DRI alleges that HP’s Indian division, Hewlett Packard India Sales Pvt Ltd, undervalued computer equipment it imported

This is, of course, an allegation as yet. But it's worth highlighting. Some (oh well, for the sake of the record - let's call them Oxford University's Centre for the non-Taxation of Business) claim that multinational corporations artificially transfer price into a location such as India, so creating a corporation tax liability there becasue this favours them.

As this allegation, however, reveals, and as those who have worked in such countries consistently report,

That's not true. No doubt in this case it is alleged that the duty saving is greater than any additional tax paid on profits. So India will still be losing.

It's a shame some tax academics really know so little about the complexities, comprehensiveness and inter-activity within tax systems when they write misleading reports and make incorrect claims.