(Yicai Global) Jan. 6 -- Xiaomi Corp.’s INR6.52 billion (USD88 million) fine from Indian authorities for alleged tax evasion is down to different ways of calculating the value of imported goods, China Fund reported, citing China’s biggest smartphone maker.

Whether royalties such as patent license fees should be included in the price of imported commodities is a complicated issue, the Beijing-based firm said. The investigation relates to imports from April 1, 2017 to June 30, 2020 and does not concern the company’s recent business, it said, adding that it will continue to keep up an open dialogue with Indian authorities.

Royalty and license fees paid by Xiaomi India and its contract manufacturers to US chipmaker Qualcomm and sister firm Beijing Xiaomi Mobile Software were found not to be included in the declared value of goods imported by the firms, the Time of India reported, citing an official document. As such, Xiaomi India is in violation of the customs law, it added.

“Three show cause notices have been issued to Xiaomi Technology India for demand and recovery of duty amounting to INR653 crore for the period April 1, 2017 to June 30, 2020, under the provisions of the Customs Act, 1962,” India’s Ministry of Finance said.

Tax officials in India raided the offices and manufacturing units of Chinese mobile phone makers including Xiaomi, OPPO and OnePlus last month looking for evidence of suspected fraudulent accounting and tax evasion.

Xiaomi sold 11.2 million smart phones in India in the third quarter, accounting for 24 percent market share, followed by South Korea’s Samsung Group with 19 percent, according to market research firm Canalys. Chinese mobile phone makers Vivo Communication Technology, Realme, and Oppo Mobile Telecommunications were in third to fifth place.

Xiaomi’s share price [HKG:1810] closed up 1.56 percent at HKD18.20 (USD2.33) today.

Editor: Kim Taylor