Aviva says its India unit is “engaging” with authorities regarding tax investigations

British insurer Aviva said on Saturday that its India unit is “actively engaging” with local authorities over alleged tax evasion practices.

Reuters reported on Friday that an Indian tax agency had found that Aviva India violated local regulations capping sales agents’ commissions with a scheme of fake invoices and clandestine cash payments between 2017 and 2023.

Aviva’s India business paid about $26 million to entities that purportedly provided marketing and training services but did not carry out any work and were actually fronts to funnel funds to Aviva agents, the agency said tax in an Aug. 3 notice reviewed by Reuters.

UK-based Aviva conspired to avoid tax and countervailing rules in India, agency says

It was alleged that the fake invoices were used by Aviva to claim tax credits and evade $5.2 million in taxes in India. The company faces up to $11 million in penalties, which is roughly its 2023 profit from selling life insurance in the country.

In a statement on Saturday, a spokesman for UK-based Aviva referred to the issue as “an industry-wide issue”, adding that its joint venture in India was “actively cooperating with the relevant authorities”.

Aviva holds 74% in its Indian joint venture with Dabur Invest Corp, a prominent local firm.

The case is part of a larger investigation into more than a dozen Indian insurers for allegedly evading $610 million in unpaid taxes, interest and penalties.

Aviva said it faced “a small potential tax claim” and “there has been no adverse ruling or penalty against Aviva”.

(Reporting by Aditya Kalra; Editing by Mike Harrison)

Photo credit: VisMedia via Aviva