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Amazon India clarifies on legal and professional services costs; assures investigation into bribery charges

Among the highest legal fees reported are two entities of e-commerce player's Indian companies -- Amazon India Ltd (holding company) and Amazon Seller Services Pvt Ltd. -- the two together spent close to Rs 8,000 crore as legal fees in the past two financial years (FY19 and FY20).

September 21, 2021 / 08:46 PM IST
While the role of the legal representatives has been highlighted in the report, the focus has come back on vast expenses Amazon makes as legal fees.

While the role of the legal representatives has been highlighted in the report, the focus has come back on vast expenses Amazon makes as legal fees.

Amazon has clarified on September 21 over costs accrued across legal and other professional services for the e-commerce major's India entities and said part of the data from it's public account filings on was misquoted.

"Given a misleading representation of a line item from our statutory filings on legal fees in a section of the media, we clarify that the line item is actually termed legal and professional expenses that includes not just the legal costs, but also the costs related to other professional services such as outsourcing, tax consultants, customer research, logistic support services, merchant onboarding services, customer service cost, etc. For instance, for the year ended March 31,2020, the legal fee was Rs 52 crore, from the total legal and professional expenses of Rs 1,967 crore," Amazon India has said in a statement.

"Despite India moving high on ease of doing business, it continues to be a highly regulated market and compliance to regulations has its own costs. But Amazon is not the only one having high legal expenses, it's competitors Flipkart may be having similar level of expenses and so are several large corporations," said an industry expert asking not to be named due to his association with e-commerce companies.

All of Amazon's India-focused companies together have spent Rs 8,546 crore as legal fees in the financial years 2018-19 and 2019-20. This is almost a fifth or 20 per cent of its two-year revenue of Rs 42,085 crore, says data from the public account filings by the company in India.

A legal expert also pointed out that most of the expenses shown as legal fees may not actually be going towards compliance and litigation but also towards facilitating operations in the country.

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A report by Morning Context has said that Amazon has launched a probe after a whistleblower raised a complaint of the company's legal representative having a role in bribing Indian officials. While the company has not commented on this specific matter, it has said that action is taken promptly for all improper actions.

Read: CAIT demands CBI inquiry into Amazon bribery allegation

While the role of the legal representatives has been highlighted in the report, the focus has come back on vast expenses Amazon makes as legal fees.

amazon-legal-fees-and-revenue

Among the highest legal fees reported are two entities of e-commerce player's Indian companies -- Amazon India Ltd (holding company) and Amazon Seller Services Pvt Ltd. -- the two together spent close to Rs 8,000 crore as legal fees in the past two financial years (FY19 and FY20).

The other entities of Amazon in India -- Amazon Retail India, Amazon Transportation Services, Amazon Wholesale and Amazon Internet Services -- also have high levels of legal charges commensurate with their size.
IANS
first published: Sep 21, 2021 03:52 pm

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