Akshata Murthy has a non-domicile status which allows her to save taxes in Britain on dividends from her Indian business. Daughter of Infosys co-founder Narayana Murthy, she owns around 0.93 per cent of the company
Akshata Murthy has reportedly used the non-domicile status even after husband Rishi Sunak was put in charge of setting taxes for the country in February 2020. AFP
There’s yet another controversy surrounding Akshata Murthy, the daughter of Infosys co-founder Narayana Murthy and wife of British finance minister Rishi Sunak. Akshata, it has been revealed, has claimed a non-domicile status in the United Kindom.
What does a non-domicile status mean? And how has Akshata Murthy benefitted from it? We take a look.
The tax status
The non-domicile status reportedly allows Murthy to save on her tax bill.
She owns around 0.93 per cent of Infosys with a value estimated last month of more than GBP500 million (Rs 4960 crore). She also has interests in several companies in the UK. The tax status means she need not pay taxes in Britain on dividends from the Indian business.
Murthy has reportedly used the non-domicile status even after Sunak was put in charge of setting taxes for the country in February 2020. It’s not known how much has she benefitted by saving taxes but it could have saved her millions of pounds in tax on foreign earnings over several years, reports The Independent.
According to the BBC, Murthy does pay taxes abroad on her foreign income.
Has Akshata Murthy broken any laws?
Saving on tax through the non-domicile status is optional. However, it is not unlawful. It can save an individual from paying UK tax on income from dividends from foreign investments, rental payments on property overseas, or bank interest. The status also means that you avoid UK inheritance tax, the Independent report says.
Murthy responds
Murthy’s spokeswoman confirmed that “according to British law, Ms Murthy is treated as non-domiciled for UK tax purposes”. “She has always and will continue to pay UK taxes on all her UK income,” she said.
“Akshata Murthy is a citizen of India, the country of her birth and parents’ home. India does not allow its citizens to hold the citizenship of another country simultaneously.”
Sunak under fire
Murthy’s valuable tax status was reported across British media and earned criticism from opposition parties in the UK, as the country raised taxes for millions amid the cost-of-living crisis.
Tulip Siddiq, a lawmaker and treasury spokeswoman in the opposition Labour Party, said Sunak should reveal “how much he and his family have saved on their own tax bill”. “The chancellor has imposed tax hike after tax hike on the British people. It is staggering that – at the same time – his family may have been benefitting from tax reduction schemes. This is yet another example of the Tories thinking it is one rule for them, another for everyone else,” she said.
Sunak became the finance minister in February 2020 as the COVID-19 pandemic was hitting the country. With inflation soaring, the purchasing power of British households has taken a beating with the standard of living declining. Sunak faces a big economic challenge and to help rebuilt public finances, he has increased the tax take to the highest level since the 1940s.
Did the government know of Murthy’s status?
A person familiar with the situation said Sunak had declared his wife’s status to the government when he became a minister and the treasury department was also informed, reports Reuters.
A government source told BBC, “Her (Murthy’s) domicile status is a matter of fact/law determined by her specific circumstances (domicile at birth)”, but added they would not be commenting further on a private individual’s tax status.
Past controversies
However, this is not the first time Sunak has been criticised for his wife’s financial interests.
Last week, he was slammed for Murthy’s family business links to Russia. Sunak had said he has “nothing to do” with Infosys. His spokesperson has also said Akshata Murthy did not have any involvement in the operational decisions of the company.
Infosys “urgently” shut down its office in Russia following the controversy.
According to a Guardian report in 2020, Murthy is shareholder in a restaurants business that funnelled investments through a letterbox company in the tax haven of Mauritius. This could allow her to avoid taxes in India.
Murthy married Sunak in 2009. She was born in India in 1980 and continues to be an Indian citizen.
With inputs from agencies
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