NEW DELHI: British insurer Aviva says its India unit is “actively engaging” with local authorities in connection with alleged tax evasion practices.

Reuters reported last Friday that an Indian tax agency has found that Aviva India breached local regulations capping commissions to sales agents with a system of fake invoices and clandestine cash payments between 2017 and 2023.

Aviva’s India business paid about US$26mil to entities who purportedly provided marketing and training services, but they did not perform any work and were actually a front for channelling funds to Aviva’s agents, the tax agency said in a Aug 3 notice reviewed by Reuters.

The fake invoices were alleged to have been used by Aviva to claim tax credits and evade US$5.2mil in taxes in India.

The company faces as much as US$11mil in penalties, which is roughly its 2023 profit from selling life insurance in the country.

In a statement last Saturday, a London-based spokesperson for Aviva referred to the matter as “an industry wide issue”, adding its Indian joint venture was “actively engaging with the relevant authorities”.

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

 - Reuters