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Taiwan's Foxconn gets minor fine after Chinese tax and land use audit

Month-long investigation of Foxconn accounting books and land use found only minor infractions

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Foxconn building. (Reuters photo)

Foxconn building. (Reuters photo)

TAIPEI (Taiwan News) — Chinese website Eastmoney.com reported that authorities have concluded tax audits and land use investigations on multiple companies operated by Foxconn, finding only minor infractions remedied through a modest fine, per RTI.

The much-publicized audit of Foxconn’s books, which began last month on Oct. 22, has largely been concluded. The Wuhan Municipal Taxation Bureau of China’s State Taxation Administration released its findings that Foxconn falsified its tax calculation basis, and the violation has resulted in a fine of NT$88,000 (US$2,800).

According to the media report, the reason for the fine was that Foxconn included inaccurately allocated expenses for personnel not engaged in R&D as R&D labor expenses, qualifying it for special deductions. The tax office alleged the infraction involved personnel for eight people in 2021, totaling NT$3.88 million, and costs associated with 15 people in 2022, totaling NT$4.62 million.

According to China’s regulations, Foxconn applied these personnel expenses for an R&D special deduction, which went beyond the scope of tax regulations and improperly reduced their taxable income.

The tax impropriety was discovered at Fulian Technology (Wuhan), which is a 100%-owned subsidiary of Fulian Precision Electronics (Zhengzhou), which in turn is a 100%-owned subsidiary of Foxconn Industrial Internet.

China's Global Times was the first to report tax audits of Foxconn's key enterprises in Guangdong, Jiangsu, and other places. At the same time, Foxconn also faced inspections regarding land use by the natural resources department in Henan, Hubei, and other places.

The announcement of tax and land audits imposed on Foxconn led to accusations that the Chinese government was meddling in Taiwan's upcoming presidential election, as Foxconn founder Terry Gou (郭台銘) had announced his intention to run for president.