TAIPEI: Foxconn, a major supplier of Apple’s iPhones, is facing a tax probe in China, two sources close to Foxconn confirmed on Monday (Oct 23), saying they believed it was disclosed by a state-backed paper for political reasons tied to Taiwan’s upcoming elections.
On Sunday, China’s state-backed Global Times tabloid said some of Foxconn’s key subsidiaries in China were the subject of tax audits and that China’s natural resources department had conducted on-site investigations on land use by Foxconn enterprises in Henan and Hubei provinces and elsewhere.
The two sources, who declined to be named due to the sensitivity of the matter, said several companies which they did not name had been audited by Chinese authorities in recent months, but they believed only Foxconn’s probe was made public for political reasons.
They highlighted the audit comes less than three months ahead of Taiwan’s presidential election and amid Foxconn’s diversification drive to move some production out of China.
Chinese authorities in Henan, Hubei, Guangdong and Jiangsu did not immediately respond to faxed requests from Reuters seeking comment on audits of Foxconn.
Foxconn, formally called Hon Hai Precision Industry, employs hundreds of thousands of people in China and is a major investor there, regularly hailed by Beijing as an example of the success of Taiwanese investors in the country.
The first source told Reuters they viewed the audit as a “warning” to Foxconn, which has been shifting some of its production lines including those for iPhones from China to India.