GUCCI Suspected Tax Evasion 1 Billion Euro Prosecutors Ready To Formally Prosecute

Reuters cited the judicial news that the prosecutor in Milan, Italy, has concluded a tax investigation of the famous luxury brand GUCCI (Gucci). The findings indicate that GUCCI is suspected of evasion of taxes (the transfer of revenue to a more preferential tax regime in another country), 1 billion yuan (US $1 billion 130 million), and Milan prosecutors are ready to formally sue GUCCI for the case.
GUCCI is reporting its revenue through the Luxury Goods International (LGI) in Switzerland, but prosecutors in Milan say they should pay taxes instead of Switzerland in Italy. LGI is Gucci's parent company, France's Kering group, and is the distribution and logistics management center of most brands under the group.
It is learnt that unless the two sides reach a consensus solution in the next 20 days or new evidence shows that Gucci is innocent, the case will be submitted to the court.
GUCCI CEO Marco Bizzarri and former chief executive Dimareo Patrizio Marco are under investigation.
Kai Yun group responded: "we have confidence in the legitimacy and transparency of GUCCI's operation mode and are actively cooperating with relevant departments."
According to previous analysis, Italy has become a frequent case of luxury tax evasion in recent years. As the economic crisis has led to a significant reduction in the income of Italy countries, relevant departments have intensified their investigation of tax evasion. But because Italy's tax departments are increasingly interfering in Italy luxury group, luxury brands, especially listed companies, are more sensitive to their image. Endless tax investigation will bring uncertainty to investors and cause stock price turbulence. Most of the brands that are worried about the lengthy and damaging image of the investigation process accept the tax authorities' fines.
But for Kai Yun group and GUCCI, in recent two years, they are enjoying "spring up". In October 24th, Kai Yun group released the three quarterly report in fiscal year 2018, showing that group sales grew 27.6% to 3 billion 400 million euros, of which GUCCI performance led, and sales rose 34.9% over the same period.
In addition, recently, Bloomberg industry research Bloomberg Intelligence has put forward 50 notable companies in 2019 after analysts tracked more than 1900 companies in technology, retail, clothing and luxury industries. In recent years, the GUCCI group has become the only luxury company on the list.
However, Zhou Ting, President of the Research Institute of customers, said that the growth of core brand GUCCI in recent years mainly depends on product innovation to absorb traffic. But because of fast changes in consumer preferences, brand continuous product innovation capability is very important. But excessive brand product innovation will make consumers appear fatigued. Therefore, Kai Yun group is also facing some risks in CUCCI product innovation.