India to impose tax on Amazon for Cloud Services Fee paid to the US

As per the new rules, Indian tax officials are going to levy tax on cloud services fees paid by Amazon to the US. The new rules are conveyed to Amazon and could result in ‘significant’ amounts of taxes for the company. The company will be liable to pay taxes for a period that could stretch to a couple of years prior to the date of order. Though it is not clear which specific tax authority passed the new order involving Amazon.

“In February 2023, we received a decision by the Indian Tax Authority (ITA) that tax applies to cloud services fees paid to the U.S. We will need to remit taxes on the services in question, including for a portion of prior years, until this matter is resolved, which payments could be significant in the aggregate,” Amazon said in its annual Nasdaq filing.

The company contended that it believed the tax authority’s decision to be ‘without merit’ and would defend its position vigorously.

The company further told its shareholders that it would have to remit taxes, as per the order, until the matter is resolved. However, the company expects to recoup the losses.