Authorities in India have blocked at least two of ByteDance’s bank accounts for alleged tax evasion, prompting it to ask a court to overturn the directive which fears it could affect its operations, two told Reuters directly informed sources.
ByteDance cut its Indian workforce in January after New Delhi decided to uphold the ban on its popular video app TikTok, first banned last year following a border clash between India and China .
China has repeatedly criticized India’s move and said it suspects it violates WTO rules.
ByteDance, which issued a statement challenging the Indian ruling, has around 1,300 employees in India, most of whom look after its overseas operations, including activities such as content moderation.
In mid-March, authorities ordered the freezing of two of ByteDance India’s bank accounts in Citibank and HSBC due to alleged fraud of certain taxes in online advertising transactions between the ByteDance unit in India and its parent company. in Singapore, TikTok Pte Ltd, the two sources said.
Authorities have also ordered Citibank and HSBC to prevent ByteDance India from withdrawing funds from any other bank account linked to its tax identification number, the first source said.
In a court case, which is due to be heard this week in a High Court in the financial capital of Mumbai, ByteDance India said that although it only has about $ 10 million (around Rs 73 crore) in its Accounts, the blocking decision was an abuse of legal process and would make it difficult to pay wages and taxes, the source added.
Both sources declined to be identified because details of the bank freeze and the company’s legal challenge were not public.
ByteDance said “we do not agree with the decision of the tax administration” in this case, adding that it is committed to obeying the law and will cooperate with the government.
Citibank and HSBC declined to comment, while the Finance Ministry did not respond to a request for comment.
The ban on TikTok apps was imposed when India banned dozens of Chinese apps last year, saying it was in the interest of national security and sovereignty.
The move was largely linked to India’s broader crackdown on Chinese companies after clashes at a disputed Himalayan border site left 20 Indian soldiers dead.
The directive to freeze ByteDance India’s bank accounts came after tax authorities last year inspected documents at the company’s office, reviewed documents and questioned some executives about advertising and other transactions with its parent company, the first source said.
Business at a standstill
In its court document, of which the source was aware, ByteDance India said that all of its activities have stalled due to the bank freeze and that such action violates its “free trade and commerce” rights. “.
“The company was already grappling with India’s ban. It may affect employee salaries, supplier payments,” the second source said.
TikTok had been the subject of intense scrutiny around the world. Under the administration of former US President Donald Trump, who alleged that the app posed national security concerns because the personal data of US users could be obtained by the Chinese government, a claim the company denied.
The new administration of US President Joe Biden has suspended a government lawsuit that could have resulted in a de facto ban on the use of TikTok in the United States.
© Thomson Reuters 2021
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