Huawei in Argentina sanctioned by customs due to undeclared import of software

Photo: Huawei-auf-Bildschirm-und-Handy. By: Christoph Scholz. Source: Flickr.

Huawei’s Argentine subsidiary is being fined by the Argentine Customs for not declaring the import of software, which resulted in unpaid taxes amounting to US$ 28 million and a fine of US$ 2 million. Argentine Customs argued that the Chinese company could not have imported equipment without purchasing the software and without paying the license fees to the parent company in China. Huawei’s Argentine subsidiary imported equipment for technological development in Argentina and these are part of global contracts called “Systems,” with technical specifications that make the hardware, software, and licensing rights “inseparable,” as they are comprehensive purchase requirements, explained the state agency.

Customs bases its claim on the General Agreement on Tariffs and Trade (GATT), which establishes that on top of the price agreed for the goods, the importer is obliged to pay an additional amount called “canon, license fee, or simply royalty” in return for the right to use the intellectual creation of the other party, and that sum of money “integrates the value for customs purposes.” Customs believes that Huawei knew of the license fees it was obliged to pay for the importation of the goods and the existence and quantum of such obligation, but only declared the value of the equipment without including in the customs duty base, the value of the software, and licenses. Customs claimed the tax difference and fined the company for its misstatement to the detriment of the tax authorities.

Top Headline:

Radio Nacional.  Fiorda, G. (2023). Argentina multa a China huawei por no declarar Importación de software.