Aviva UK accused of dodging India's compensation and tax rules

30 Aug, 2024

Aviva UK accused of dodging India's compensation and tax rules

An Indian tax agency has accused British insurer Aviva of violating local commission regulations through fake invoices and secret cash payments. Aviva's India operations allegedly paid around $26 million between 2017 and 2023 to entities that claimed to offer marketing and training services. These vendors, however, did not provide any actual services and were used as fronts to funnel money to Aviva’s agents.

The Directorate General of GST Intelligence (DGGI) reported that this scheme allowed Aviva to evade $5.2 million in taxes by improperly claiming tax credits. This investigation is part of a broader probe into over a dozen Indian insurers suspected of avoiding $610 million in taxes, interest, and penalties. Aviva faces potential penalties of about $11 million, equivalent to its 2023 profit from Indian life insurance sales. Evidence from a 205-page report includes emails and messages detailing how Aviva executives circumvented compensation regulations.

Despite India's relaxed commission limits in 2023, Aviva’s practices included paying commissions above the regulatory caps through fake invoices. The case continues as Aviva intends to contest the allegations but has not yet responded publicly.