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Allegation of paying only 5% tariff applicable to older LEDs when importing OLED components
Samsung and LG: "OLED is an advanced form of LED technology... the same tariff should apply"
Reuters reported that Indian tax authorities are investigating Samsung Electronics and LG Electronics in connection with allegations that they paid less customs duty when importing display components for high-end TVs.
According to a report on the 24th (local time), the Directorate General of GST Intelligence (DGI) under the Indian Ministry of Finance is investigating allegations that Samsung Electronics and LG Electronics paid a 5% tariff instead of 15% when importing display components used to manufacture organic light-emitting diode (OLED) panels.
Four sources said that DGI officials visited Samsung Electronics' India headquarters in Gurugram, a satellite city near the Indian capital New Delhi, in recent weeks and questioned officials.
LG Electronics is also said to have received written inquiries from Indian authorities regarding OLED imports and submitted its responses.
The Indian government's position is that these Korean companies unduly applied a preferential tariff rate of 5% when importing OLED panel components, and that the 5% tariff rate applies only to older liquid crystal display (LCD) or light-emitting diode (LED) products.
On the other hand, Samsung Electronics and LG Electronics maintain that OLED is merely an advanced form of LED technology, and therefore the same tariff should apply, sources said.
It is not yet known how much additional tax the two companies would have to pay if Indian authorities apply a 15% tariff.
Generally, after an investigation, the Indian government sends a demand for tax payment and can impose penalties of up to 100% of the evaded tax. Companies can challenge such demands in Indian courts if they do not accept them.
Samsung Electronics stated in a statement sent to Reuters that it is "reviewing the matter and fully cooperating with the relevant (Indian) authorities" and "has a firm commitment to comply with all laws and regulations."
In the case of LG Electronics, a source said that the company voluntarily paid an unspecified deposit to cover any additional tariffs that the Indian tax authorities might demand.
Since its first entry into India in 1997, LG Electronics has built its entire business process locally, from production to research and development (R&D), sales, and service, for 28 years.
Last year, LG Electronics listed its Indian subsidiary on the National Stock Exchange of Mumbai, and its current market capitalization amounts to 12 billion dollars (approximately 16.4 trillion won).
Samsung Electronics, which entered India earlier than LG Electronics in 1995, also currently operates production plants in Noida and Sriperumbudur, near the capital New Delhi. The Noida plant produces smartphones, tablets, and refrigerators, among other things.
It also operates research and development (R&D) centers, the Samsung Semiconductor India Research (SSIR) institute, and design centers, employing 18,000 people in various fields.
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