BBC dodging taxes in India, shows official survey

The Income Tax Department has gathered evidence which shows that BBC has allegedly not paid tax “on certain remittances which have not been disclosed as income in India by the foreign entities of the group.”

The Income Tax Department’s survey operations also revealed that services of BBC’s seconded employees have been utilised for which reimbursement has been made by the Indian entity to the foreign entity concerned. Such remittance was also liable to be subject to withholding tax which has not been done.

An official statement issued by the Income Tax Department today does not mention BBC by name but refers to the evidence being gathered in the course of a survey carried out “at the business premises of group entities of a prominent international Media Company at Delhi and Mumbai.”

“The group is engaged in the business of development of content in English, Hindi and various other Indian languages; advertisement sales and market support services, etc,” the statement adds.

The survey revealed that despite substantial consumption of content in various Indian languages (apart from English), the income/profits shown by various group entities of BBC is not commensurate with the scale of operations in India.

Further, the survey has also thrown up several discrepancies and inconsistencies with regard to BBC’s Transfer Pricing documentation. Such discrepancies relate to level of relevant Function, Asset and Risk (FAR) analysis, incorrect use of comparables which are applicable to determine the correct Arms Length Price (ALP) and inadequate revenue apportionment, among others, the official statement explains.

The survey operation has resulted in unearthing of crucial evidence by way of statement of employees, digital evidence and documents which will be further examined in due course.

According to the statement, the survey was carried out in a manner that did not interfere with the media activities of the group.

“ It is pertinent to state that statements of only those employees were recorded whose role was crucial including those connected to, primarily, finance, content development and other production related functions. Even though the Department exercised due care to record statements of only key personnel, it was observed that dilatory tactics were employed including in the context of producing documents that were sought. Despite such a stance of the group, the survey operation was conducted in a manner so as to facilitate continued regular media/channel activity,” the statement added.