South Korea’s National Tax Service is conducting an investigation into Huawei Korea, the local branch of Chinese tech giant Huawei Technologies, the company said Tuesday.
Investigators from the Seoul branch of the National Tax Service are currently conducting a tax audit on Huawei Korea, the firm said, calling it a regular process that takes place every five years.
“The NTS has been investigating our company as part of a regular audit that takes place every five years,” Huawei Korea spokesperson Shin Ji-hyun said.
“The ongoing investigation took off as part of a scheduled process and was not prompted by any form of suspicions (involving Huawei Korea and its businesses),” she said.
An NTS representative declined to confirm or comment on the details of the ongoing probe.
Despite the company’s claims, local reports have alleged that the local tax watchdog is looking into whether any form of tax evasion took place during dealings between Huawei’s Korean office and its headquarters in China.
For example, Huawei Korea may have sold its products to its Chinese headquarters at below-market prices, while importing products from its main office at above-market prices to maximize the company’s net profit, the reports said.
Huawei has strongly denied the allegations, calling them “speculative” and emphasizing that the ongoing tax probe has no ties to its dealings with its headquarters.
Huawei is the world’s third-largest smartphone maker by sales after Samsung Electronics and Apple. Huawei’s Korean office has around 150 employees and mostly provides network services to local telecom companies.
The Chinese tech giant has been facing legal summons in the U.S. as well. Last month, the U.S. Department of Commerce demanded the firm’s American branch turn over all information related to the export of American technology to countries such as North Korea, Cuba, Iran, Sudan and Syria.