Cadbury used nonexistent factory in India to avoid taxes

Thursday, 7 March 2013 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Cadbury Plc, now part of Mondelez International, used a nonexistent factory in India to avoid about US$ 46 million in taxes, the Wall Street Journal reported on Tuesday, citing a report by the Indian tax authorities.

Cadbury’s Indian unit manipulated invoices and other documents to get an exemption from taxes available to companies that began production in new plants in Himachal Pradesh by 31 March 2010, the Journal said. The Directorate General of Central Excise Intelligence, which conducted the investigation, concluded that the factory could not have existed by the deadline as the company had not received the necessary approvals from government agencies, the Journal said.

Mondelez is reviewing the content of the show-cause notice from India’s excise department, spokesman Michael Mitchell told Reuters in an emailed statement.

“We have been fully cooperating with the authorities on this enquiry,” Mitchell said. Tax officials in India could not be reached for comment outside regular business hours.

India had said in November it was investigating the local unit of Cadbury, saying the company may have evaded as much as two billion Indian Rupees in taxes.

India is aggressively pursuing tax claims against multinational firms operating in the country as the Government seeks to rein in its budget deficit.

Anglo-Dutch oil major Royal Dutch Shell’s Indian unit has been accused of undervaluing a share sale to its overseas parent in 2009 by US$ 2.7 billion.

Vodafone, the largest corporate investor in India, has repeatedly clashed with Indian authorities over taxes since it bought Hutchison Whampoa’s local mobile business in 2007.

Cadbury was acquired by Kraft Foods in 2010 in a US$ 19 billion deal. Kraft then spun off its North American grocery business as Kraft Foods Group.

Mondelez is the name of what remains of Kraft Foods Inc after the spin-off. Its brands include Oreo cookies, Cadbury chocolate and Trident gum.

Kraft is also under investigation in India on whether it needed to pay taxes arising from its US$ 19 billion takeover of Cadbury.