UK chancellor Rishi Sunak drawn into Narayana Murthy, Amazon’s tax row

BENGALURU: UK chancellor and N R Narayana Murthy’s son-in-law Rishi Sunak was pulled into a service tax dispute involving Murthy’s Cloudtail business on Amazon, forcing his office to issue a statement on taxes to be paid by digital businesses.
An article in the UK publication The Guardian on Monday said that Cloudtail, a joint venture between Murthy’s Catamaran Ventures and Amazon, faces a 5.5-million-pound (about Rs 55-crore) demand, including interest and penalties, from India’s tax authorities. Cloudtail, one of the biggest sellers on, had revenues of Rs 11,412 crore in fiscal 2020.
The report came days after Sunak welcomed the “seismic tax reforms” agreed by the world’s richest economies at the G7 finance ministers meeting, to make companies pay in the countries where they do business.

A spokesperson for the UK Treasury office told The Guardian, “The Chancellor’s consistent position has been that it matters where tax is paid, and any agreement must ensure digital businesses pay tax in the UK that reflects their economic activities. That is what our taxpayers would expect and is the right thing.”
Cloudtail said it received a show-cause notice from the Directorate General of Goods and Service Tax Intelligence (DGGI) dated December 27, 2018, amounting to Rs 54.5 crore, along with interest and penalties as applicable for service tax related matters. This has been considered as contingent liabilities as on March 31, 2020.
Cloudtail told TOI that it has disputed the service tax claim and the matter is before the adjudicating authorities. “Cloudtail has been disclosing this as a contingent liability in its annual report since 2019 as per Indian accounting standards. Since this matter is sub judice, we are unable to comment any further. Cloudtail reiterates that it is in full compliance with the laws of India,” the spokesperson said.

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