Indian Tax Authorities Accuse AB InBev of Tax Avoidance
Indian tax authorities have accused AB InBev of tax avoidance and price cartelization.
In 2016, AB InBev acquired SABMiller for over $100 billion to create the world’s largest beer company, which in turn generated two legacy issues for them in India.
Firstly, the Indian tax authority issued a demand notice for alleged capital gains tax liability last year on SABMiller’s 2006 acquisition of Foster’s India business, trademarks and other intellectual properties.
Though the company has challenged Indian tax authorities, they revealed in a filing with the Hong Kong exchange that it has accounted about $55 million as liability in its books.
SABMiller had renamed royalty transactions as management services. The Authority of Advance Rulings, that examines cases of income tax liability involving non-residents in India, said the services qualify as technical know-how and should be taxable under Indian law.
Secondly, The Competition Commission of India (CCI) opened an investigation last year on SABMiller and other brewers for price cartelisation.
This is after AB InBev played whistleblower and informed the regulator of an industry cartel including United Breweries, part-owned by Heineken and Carlsberg, of discussing and deciding on beer prices before submitting them to Indian states, which controls pricing. These three brewers control over 85% of the country’s beer market.
AB InBev is the second largest brewer in India with 23% of the market share.
Company profile: AB InBev’s track record of unethical business practices
This is not the first time AB InBev has been caught up in unethical business practices, including illegal tax breaks which was exposed by the European Commission.
The IOGT International company profile of AB InBev shows: The beer giant is also closely linked to the tobacco industry, has been fined for trade violations, bribery, sexism, and other Human Rights violations.