(Photo : truecaller)

• Indian tax authorities raided local offices of Swedish software group, Truecaller, causing an 11% drop in the firm's shares.
• The raid is part of an investigation into alleged tax evasion, including concerns about transfer pricing practices.
• Truecaller confirmed the raid, emphasizing its cooperation with authorities and stating it has always paid all due taxes.
• The outcome of this investigation could influence future tax practices in the tech industry.

In a surprising turn of events, the Indian tax authorities conducted a raid on the local offices of the Swedish software group, Truecaller. The company confirmed the incident in a statement, which led to an 11% drop in the firm's Stockholm-listed shares. The raid was carried out without prior notice, and Truecaller is currently awaiting official confirmation and communication from the tax departments.

Truecaller, however, has assured that this is not an uncommon practice and that they will fully cooperate with the relevant authorities. The company also clarified that it had not been subject to any tax investigation in India outside of routine audits. The shares of the company traded 9.3% lower at 1210 GMT following the incident.

Tax Evasion Investigation

The tax authorities' raids at the local offices of the Swedish company are part of an investigation into alleged tax evasion. According to the news agency PTI, tax officials stated that the searches were conducted to gather information and examine documents related to potential tax evasion, including concerns surrounding transfer pricing practices. Truecaller has offices in Bengaluru, Mumbai, and Gurugram.

Truecaller confirmed the searches, stating that its India offices were visited by Indian Tax officials on Thursday, November 7, 2024. The company emphasized its cooperation with the authorities and maintained that it is not subject to any tax investigation in India outside the routine tax audits. Truecaller also stated that it has always paid all taxes due in India and all regions where it operates.

Truecaller's Response and Future Implications

The company further stated that its financial statements have consistently received unqualified audit opinions. Truecaller's transfer pricing policy for its intra-group transactions is consistent with internationally accepted standards. The purpose of this policy is to ensure that Truecaller pays tax in a way that is correct from the perspective of both the Swedish and the Indian tax authorities. The policy is continuously independently reviewed to ensure that it meets the tax law requirements of both countries.

The raids come a day after Truecaller appointed Rishit Jhunjhunwala, the current chief of products, as its new CEO. Jhunjhunwala has worked for Truecaller since 2015 and is also the managing director of the company's India division. He will take over his new role on January 9, after Alan Mamedi steps down. Co-founders Alan Mamedi and Nami Zarringhalam said in a letter that they have decided to give up their operational duties at Truecaller from June 30, 2025.

This incident is reminiscent of similar events in the past where tech companies have faced scrutiny from tax authorities. For instance, in 2019, Google's offices in Paris were raided by French authorities as part of a tax fraud investigation. The company was later fined 500 million euros in a settlement with the French government.