Volkswagen's Indian unit is currently dealing with a substantial tax evasion notice worth $1.4 billion. The Indian government claims that the German automaker intentionally misclassified imports of components for its Audi, VW, and Skoda vehicles in order to avoid higher import taxes.
The government alleges that Volkswagen imported nearly complete vehicles in unassembled form, which should have incurred a 30-35% import tax under CKD regulations. However, the company declared them as individual parts and paid only 5-15% in taxes. The investigation found that Volkswagen's India unit, Skoda Auto Volkswagen India, used various shipment consignments to evade detection and intentionally avoid paying the required duties. The Office of the Commissioner of Customs in Maharashtra described this logistical arrangement as an artificial structure created to bypass tax obligations.
As a result of this news, Volkswagen shares experienced a decline of up to 2.13% on the Frankfurt Stock Exchange.