Key Points：
·Foxconn, China Contractor for Apple, Said to Be Under Tax Audit.
·The Taiwanese factory giant is under investigation in four provinces.
·The company said it treated legal compliance as a “fundamental principle.”
Chinese state media reported on Sunday that some of Foxconn’s key subsidiaries in Taiwan are under suspicion of violating tax and land use laws and regulations.
Possible tax evasion
A recent tax inspection carried out by China’s tax department on Foxconn Group’s major enterprises in Guangdong, Jiangsu, and other regions in China has uncovered several significant issues. Firstly, these Foxconn subsidiaries are suspected of engaging in tax evasion, which involves companies avoiding their tax obligations through various means, consequently reducing the amount of tax paid.
The purpose of the tax inspection is to ascertain whether tax evasion has indeed taken place. If proven, tax evasion can severely disrupt the taxation system and create an unfair competitive environment.
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Financial records appear unclear
Secondly, the tax audit has raised concerns about the lack of financial clarity within Foxconn’s companies. Financial opacity refers to the presence of inaccurate records and the concealment of vital information in a company’s financial reports.
This behavior not only misguides investors but also disrupts the normal functioning of the market. A tax audit can unveil financial opacity by examining a company’s financial records and relevant documents.
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Irregularity in land use also unearthed
In addition to the tax audit, China’s natural resources department conducted on-site investigations regarding the land use of Foxconn’s key enterprises in Henan and Hubei provinces.
The purpose of this land use survey is to ensure that companies are using land resources in accordance with the law and protecting the ecological environment. Unfortunately, this survey also uncovered certain issues.
Firstly, there are suspicions of irregularities in Foxconn’s land use practices, including actions such as unauthorized land occupation and exceeding approved land use boundaries. These actions not only deplete the country’s land resources but also result in significant harm to the ecological environment.
Secondly, the land use survey may reveal environmental pollution problems arising from Foxconn’s land development activities. Land development often involves various industrial processes. Without adequate environmental protection measures in place, it can lead to pollution in the surrounding environment.
The land use investigation can identify whether the company is causing environmental pollution. The findings will help authorities to take appropriate measures to mitigate it.
Zhang Wensheng, deputy dean of the Taiwan Research Institute at Xiamen University, explained to the Global Times that these audits and land use investigations are standard procedures that apply to any enterprise suspected of violating laws and regulations. He emphasized that Foxconn’s subsidiaries should actively cooperate with these audits and investigations, and if violations are found, they should acknowledge their mistakes, accept penalties, and take corrective actions.
