Cadbury in Indian tax dodge
On the 6th March, the Wall Street Journal reported that Cadbury PLC (owned by Kraft) is being pursued by Indian tax authorities after dodging about $46 million in taxes by pretending to produce chocolate at a factory that didn't exist.
A 103-page report by the country's tax authorities, which was reviewed by The Wall Street Journal, accuses Cadbury's Indian unit of manipulating invoices and other documents to get a tax exemption available to companies that began production in new plants in the northern Indian state of Himachal Pradesh by March 31, 2010.
An investigation by the Directorate General of Central Excise Intelligence concluded that the factory could not have been built at this time as it did not have the necessary permits. The expansion of an existing factory was misrepresented as construction of a new plant eligible for the tax exemption, a former Cadbury executive said.
According to the Wall Street Journal, Cadbury reprogrammed its accounting system so employees could submit false invoices, purchase orders and other documents that made it seem as if a new plant were operating, even though it couldn't have been doing so legally.
Cadbury sold about $591 million in goods from that time through to January 2013 without paying taxes on them, the report says. Company statements indicate that Cadbury likely generated at least $700 million in sales from India last year.
The plant also is at the centre of a U.S. Securities and Exchange Commission investigation into whether Cadbury bribed Indian officials.
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