In Great Britain, the pressure on Finance Minister Rishi Sunak is increasing. The reason: His wife Akshata Murthy, an Indian billionaire’s daughter, is said to have hardly paid any taxes because of a controversial regulation.
Until recently, the British Treasury Secretary Rishi Sunak was considered the most promising successor to Prime Minister Boris Johnson. But now the conservative politician is heavily criticized for his wife’s tax status.
Akshata Murthy, the daughter of an Indian billionaire and Sunak’s partner, confirmed a report in the newspaper “The Independent‘ that she is ‘treated as a non-resident for UK tax purposes’. This so-called ‘non-domiciled’ status allows people who are not UK residents to avoid tax on foreign income.
For someone like Murthy, who owns shares in the family’s IT empire worth around £690m (€825m), that’s a whole lot of tax savings. The company’s latest reports suggest that the shares earned it £11.6million in dividend payments last fiscal year. The 42-year-old is officially entitled to claim this tax status. It raises a politically thorny question, however, as Murthy is declaring that the UK – the country where her husband holds the second most important political office – is not her permanent residence.
Akshata Murthy – richer than the Queen?
On Friday, Murthy gave in to growing public pressure and announced he would pay British taxes in the future. She understands that many are of the opinion that their tax regulations are not “related to the job [ihres] man as Treasury Secretary,” said Murthy, adding that she appreciated the “British sense of fairness”. She said she would pay future tax on all worldwide income and for the most recent tax year, excluding retrospective income.
Akshata Murthy grew up in Mumbai, India, the daughter of a tech billionaire. She studied fashion design and sales in Los Angeles and later earned her master’s degree from Stanford University, where she also met her future husband Rishi Sunak. After Stanford, Murthy worked as a marketing director for a Dutch tech fund before founding her own fashion label, Akshata Designs, in 2007 – which turned out to be a flop. The couple married in India in 2009 and moved to the UK four years later, just before Sunak became an MP.
Today, Murthy’s fortune comes from her 0.93 percent stake in Infosys, the tech-services empire her father built. The value of her shares is estimated at around £690million – which she is said to be richer than Queen Elizabeth II.
Of the “Guardians” estimates that Murthy potentially avoided around £20m in tax due to her tax status, for which she currently pays £30,000 a year. As a UK tax resident, she would likely have to pay around £4.5m in tax a year on her estimated 11, Paying £5million in annual dividends, Murthy wants to keep her “non-dom” status, which could allow her family to legally avoid paying inheritance tax.
Boris Becker: his successes, his women, his finances
36 images
Labor Party accuses finance minister of lack of transparency
For the British Labor Party, the headlines are a godsend. The social democratic party is outraged that Rishi Sunak may have avoided paying taxes in the tens of millions because of his wife’s status, while at the same time, as finance minister, he imposed tax increases on the public. So accused Louise HaighTransport Minister in the Shadow Cabinet, Sunak for not being transparent about his family’s financial affairs while he himself raised taxes for millions amid a deepening cost-of-living crisis.
“The Treasury Secretary has not been transparent. He has spoken up on a number of occasions to try and muddy the waters around the issue,” Haigh said on BBC radio show Today. “Clearly that was legal. I think the question a lot of people are going to be asking is whether it was ethical and right that the Finance Secretary, while heaping 15 separate tax increases on the British public, benefited from a system which enabled his household to pay potentially tens of millions of pounds less in tax.”
Both the Labor Party and the “Liberal Democrats” are now calling for an investigation into whether the finance minister has breached the ministerial code because of his lack of transparency. In addition to rumors of green card ownership, the pressure on Sunak is also being increased by media reports that his Treasury Department had increased social security contributions just days before he himself a new low-tax system is said to have introduced – which apparently aims to benefit some wealthy “non-dom” investors.
The Treasury Secretary then spoke up himself on Friday, confirming rumors that he holds an American green card – meaning he has identified himself as a “permanent U.S. citizen” during his 19 months as Treasury Secretary and a total of six years as Congressman for tax purposes ” had issued. According to a source of the “GuardiansAkshata Murthy also appears to have a green card. However, this would weaken Sunak’s defense, who had argued that his wife was claiming “non-dom” status as she planned to eventually return and live in India.
Poor prospects for Britain’s finance minister
Meanwhile, the finance minister is being defended by his own party. Prime Minister Boris Johnson admitted at a press conference on Friday that he was not informed about Sunak’s wife’s tax status. However, he denied that anti-family sentiment was being stirred up in Downing Street and instead praised the Minister for his “superb work”.
Tory MP Kevin Hollinrake also dismissed accusations that Murthy’s non-dom status was “tax evasion”, arguing that both the Conservative and Labor governments had exploited that status. Speaking on the Today programme, he said: “This is not tax evasion. It is a deliberate policy of attracting wealthy people to the UK from other countries around the world on the basis that they create jobs and create wealth in the UK, which benefits everyone.”
Despite the backing of his party, the revelations about his wife’s tax status come at the worst possible time for the finance minister. Because of rising inflation, Sunak – who is actually regarded as the most promising successor to Prime Minister Johnson – is confronted with the worst poll numbers of his career. A recent YouGov poll found that its popularity ratings have plummeted a whopping 24 percentage points in the past two weeks. The Finance Minister should now have difficult weeks ahead of him.
Sources: “The Independent“, “Guardians“, “BBC“, Twitter, with AFP footage