According to a media source on Monday, Cloudtail India Pvt Ltd, the online retailing joint venture of Infosys co-founder N R Narayana Murthy’s firm and Amazon.com, was hit with a 5.5 million pound demand from tax authorities after paying “meager” taxes over the past four years.
‘Special merchants,’ such as Cloudtail, were reportedly established by Amazon and accounted for roughly 35% of overall sales on the site until 2019.
Despite the fact that Murthy’s Catamaran Ventures owns 76 percent of Cloudtail and Amazon owns the remaining 24 percent, the company’s two top positions – chief executive and finance director – were held by Amazon. According to a report in the ‘The Guardian’ publication, Cloudtail’s holding company, Prione, is likewise headed by a former Amazon manager.
It stated it is unclear what the tax issue is about, but that the company is challenging the bill and that it is unable to discuss further since the “matter is sub judice.”
“Reaching an international agreement on how large digital companies are taxed has been a priority for the chancellor since he took office,” said a spokesperson for his UK Treasury office.
“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,” the spokesperson said.
It further alleges that the annual report discloses that Cloudtail, which only sells through Amazon, paid Amazon fees of 95 million pounds last year, about ten times more than the profit declared by the Investment firm.
“The whole structure raises questions if Cloudtail is really an asset of Amazon and if the Murthys are the name lenders. The exact detail of the deal will only be known if the investigation agencies seek details of their shareholder agreements, According to Rashmi Das, an author specializing in Indian e-commerce.
According to a representative for Prione Cloudtail’s holding company, Catamaran, and the Murthys, “Cloudtail has not violated any law and is in full compliance with the law of the land in letter and in spirit. The Murthy family has put in the required equity capital in Prione [parent company of Cloudtail], commensurate with its shareholding. The allegations are baseless and incorrect.
“Cloudtail is an independent company that makes business decisions to protect its interests. Cloudtail is governed by a board of directors. The catamaran has [a] majority of the directors and therefore controls the board. The members on the board from Catamaran are high-quality professionals with extensive business experience. The details of the decisions and deliberations of the board of Cloudtail are minuted and available for inspection by the relevant Indian authorities.”
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