Why Amazon can expect a free ride under Rishi Sunak
Sunak’s family has close business ties with Amazon India and, as UK chancellor, he afforded multiple tax breaks to the company. Any chance of appropriate scrutiny – whether in terms of taxation or privacy concerns – is unlikely
The appointment of Rishi Sunak as the latest UK prime minister has come as a gift for tech and e-commerce giant Amazon.
Sunak and the tech giant enjoy a cosy relationship through his father-in-law, N R Narayana Murthy, who is a long-time business partner of Amazon.
Murthy has a current net worth of $4.6 billion, largely through the founding of Indian tech company Infosys, which he continues to hold a minority stake despite recently retiring as chairman.
Sunak’s wife Akshata Murty has a net worth of £690m ($791 million) from her less than 1 percent share in Infosys, according to The Times.
Sunak’s father-in-law’s multi-billion deal with Amazon
In June 2014, N R Narayana Murthy’s Catamaran Ventures entered into a joint venture with Amazon, which would later go on to be called Cloudtail India.
Cloudtail went on to become one of the largest sellers on Amazon’s Indian marketplace, reeling in over £900 million in revenues in 2019 alone, according to the Guardian.
Since August 2021, Cloudtail India is a wholly-owned subsidiary of Amazon India after the e-commerce giant acquired 76 percent of Catamaran Venture’s stake in Cloudtail at an undisclosed value.
To put the closeness of Murthy and Amazon into perspective, Cloudtail was given ‘special merchant’ status and accounted for 35 percent of total sales on Amazon India until 2019.
Also, despite the fact that Amazon held 24 percent of the joint venture, the two top positions of Cloudtail – chief executive and finance director – were held by Amazon. Prione, Cloudtail’s holding company, was also run by a former Amazon manager.
Sunak’s ‘Amazon tax-cut’
In March 2021, as UK Chancellor of the Exchequer, Sunak announced a £25 billion “super-deduction” tax break, allowing Amazon and other large companies to offset 130 percent of investment spending on plant and machinery against profits for the next two years.
TaxWatch, an investigative think tank on the UK tax system, branded the move as ‘The Amazon Tax-Cut’, and stated that it would allow the company to “entirely wipe out their UK Tax bill”.
One winner will be Amazon, who we believe could entirely wipe out their UK Tax bill with the super-deduction.
— TaxWatch (@taxwatch) March 4, 2021
Then in June 2021, just days after Sunak had led G7 finance ministers’ push to reach an agreement on a global deal aiming to charge tech companies higher tax rates, it was revealed that Cloudtail India was facing a £5.5 million charge from Indian tax authorities.
The company was denounced for paying “meagre” taxes across the previous four years, and bending the rules to pay less tax.
“Reaching an international agreement on how large digital companies are taxed has been a priority for the chancellor since he took office,” Sunak’s UK Treasury office said after the revelations.
Amazon’s £1m UK tax credit
Sunak failed to live up to those words, however, as it was revealed that Amazon’s core UK division was gifted more than £1m in tax credits in 2021 by UK tax authorities. That year, the tech giants profits grew by almost 60 percent to £204m.
Two taxless years for Amazon in the UK
It was also reported by the Guardian in August this year that Amazon now stand to not have to pay tax in the UK for the next two years as a result of the same aforementioned “super-deduction” tax break introduced by Rishi Sunak in 2021.
“Even before the super-deductions, Amazon paid little corporation tax in the UK, in part because the bulk of their UK income is still booked in Luxembourg,” Paul Monaghan, chief executive of the Fair Tax Foundation told the Guardian.
“However, we now have a situation where Amazon UK Services are not only not paying tax, but they are being handed huge tax credits for investment that almost certainly would have happened anyway.
“This will ensure that tax payments are not only wiped out last year, but this year and future years as well.”
AWS accesses personal UK health data
Sunak’s relationship with Amazon should also come as a concern when it comes to the tech giant’s potential access to personal health data of UK citizens.
The National Health Service (NHS) called on Amazon Web Services (AWS) for the creation of ‘NHS login’, a serverless identity platform for residents of England to access a variety of government healthcare apps.
In Scotland, Amazon was embroiled in controversy following the creation of the country’s contact trace app. The Herald on Sunday revealed that people were automatically handing over personal information to AWS when they agreed to the terms and conditions of the app.
What do Sunak’s Amazon ties mean for the UK?
It is clear that Rishi Sunak’s cosy relationship with Amazon means that any meaningful scrutiny of the tech giant is highly unlikely, whether it be in terms of adequate taxation or privacy rights.
Investment tends to buy special privileges for any large corporation in whichever country they pour their money but when the leader of a nation has personal ties with a company, any hopes of impartiality and appropriate examination can be thrown out the window.