Foxconn said to face tax investigation in China, stock falls 2%
Apple’s supplier Foxconn (OTCPK:FXCOF) and its subsidiaries are facing a tax investigation in China for possible violations, sources close to the company told Reuters.
China’s natural resources agency also carried out on-site investigations into the land use of Foxconn (OTCPK:FXCOF) firms in the provinces of Henan and Hubei, and elsewhere.
The sources noted that the audits come less than three months before Taiwan’s presidential election and in the midst of Foxconn’s (OTCPK:FXCOF) efforts to diversify its manufacturing out of China.
The investigations could likely be a warning for Foxconn (OTCPK:FXCOF), formally known as Hon Hai Precision Industry (OTCPK:HNHAF), which has been moving some of its production lines from China to India. “They want you to take a side,” the source said. “You either stay with us, or leave.”
“Their economy isn’t doing well. It is a warning, seeing major companies like us moving to India,” they added.
Foxconn (OTCPK:FXCOF) said on Sunday that it would actively cooperate as legal compliance is a fundamental principle for its operations.
On Monday, Foxconn’s Taiwan-listed stock fell by 2.2%, while the overall Taiwan market was down about 1%.