Karnataka to resolve tax issue with Amazon

The Karnataka government said it hopes to resolve a taxation issue with global online retailer Amazon, after a prominent business leader of the state accused the US firm of “holding a gun” on the state.

“We are trying to resolve the issue. We held talks with Amazon officials, including Amit Agarwal, even two days ago,” Karnataka finance secretary I N S Prasad told Business Standard. An Amazon spokesperson said the state secretary has clarified its stand that talks are on with Amazon.

T V Mohandas Pai, chairman of Manipal Global Education, told an audience of entrepreneurs at the TiE Bangalore Leapfrog event that the state was trying to resolve the taxation issues of e-commerce companies such as Amazon and raised objections to the way the US retailer was dealing with the local government. “Amazon is holding a gun against the government. It is against the law of the land. If you can’t follow the law of the land, please go away,” said Pai.

A year-long dispute on levying value-added tax on Amazon’s transactions is not resolved, with Amazon rejecting a proposal that it should own up tax defaults on behalf of the traders on its platform if they don’t pay the dues.

Later Amazon’s senior vice-president for International Diego Piacentini said that India is among the fastest growing market for Amazon globally and it is experimenting with new models to bring more people online. The models include using chai-shops in villages to get more retailers to sell online.

“There is huge scope in rural India; we are teaching rural retailers how to sell online (using tea-carts for demos). You make money from an entire ecosystem, not just one line of business,” he told the audience.

India will see physical stores continue to do business even as more people go online to buy goods but the focus is to be relevant to the consumer in either segment.

Amazon would follow the model it adopted in the US, its home market, by focusing on the core business while building the ecosystem in the country.

“Can’t ask a father to choose between kids,” Piacentini said, when asked to compare between China and India.