PROBLEMS NEVER COME singly, it is often said. This South Korean electronics and smartphone major seems to be chased by problems of one kind or the other. The latest problem to hit Samsung is the tax demand on it. New Delhi has slapped the South Korean giant with a demand of USD 601 million in back taxes and penalties. The demand represents a substantial chunk of last years net profit of USD 955 million for Samsung in India, where it is one of the largest players in the consumer electronics and smartphone market. Samsung is alleged to have dodged tariffs on import of key telecom equipment. “The issue involves the interpretation of classification of goods by customs,” Samsung said in a statement, adding that it complied with Indian laws. German car maker Volkswagen and New Delhi, too, are locked in a legal battle in which the auto-maker is challenging a record demand of USD 1.4 billion in import back taxes on grounds of misclassifying car parts. The Samsung dispute pertains to import of the remote radio head, a radio-frequency circuit enclosed in a small outdoor module that tax officials called, one of the most important parts of 4G telecoms systems. The component fitted on telecom towers transmits signals and is subject to a tariff, the government said, though Samsung disagreed on how it functions. Just as Samsung was heaving a sigh of relief after an industrial dispute at its Sriperumbudur facility in Tamil Nadu ended, the tax demand has come as a fresh bolt from the blue to the South Korean major. Is the ecosystem becoming difficult to navigate? Well, the unfolding developments are watched with more than cursory interest in the corporate world.
