Digital Tax

Canada in July became the eighth country to impose a unilateral digital services tax

In October 2021, India and the US came to terms to settle differences with respect to the equalisation levy, commonly known as the digital tax

India and the US have decided to extend a 2 per cent equalisation levy or digital tax on e-commerce supplies until June 30, the finance ministry said on Friday. In a major reform of the international tax system, India and the US have joined 134 other members of the OECD/G20 Inclusive Framework (including Austria, France, Italy, Spain, and the UK) in reaching an agreement on October 8, 2021, on the statement on a two-pillar solution to address the tax challenges arising from the digitalisation of the economy. On October 21, 2021, the US and Austria, France, Italy, Spain, and the UK reached a political compromise on the transitional approach to the unilateral measures in force while Pillar 1 is implemented. On November 24, 2021, India and the US agreed that the same terms that apply under the October 2021 Joint Statement shall apply between India and the US with respect to India's charge of 2 per cent equalisation levy on e-commerce supply of services and the US' trade action regardin

On the 5th day of the ministerial meeting, most ministers had already gone home, although India's trade minister Piyush Goyal and European Trade Commissioner Valdis Dombrovskis remained until the end

The first part of the two-pillar deal aims to reallocate taxing rights on about $200 billion in profits from the biggest and most profitable multinationals to the countries where their sales occur

Uncertainty over OECD's global tax deal affects collection in FY23

May delay implementation of global tax deal

Discusses adopting multilateral approach in tax treaties for faster solution

US to withdraw threat of retaliatory trade action

Tighter rules likely for social media firms, may supersede IT laws; Digital tax for US companies to stay until OECD pact comes into force. More on today's top headlines

There is little consensus among experts on whether or not the deal will bring in more revenues to India than the equalisation levy

In meet with US CEOs, Sitharaman says India offers a spectrum of opportunities to businesses

Govt must protect revenues under the new tax deal

OECD agreement to be deliberated by finance ministers of G20 nations on Wednesday

India may have to withdraw digital services tax or the equalisation levy and give a commitment not to introduce such measures in the future if the global minimum tax deal comes through

The 15% floor agreed to is, however, well below a corporate tax rate which averages around 23.5% in industrialised countries.

India introduced equalisation levy for digital advertising services in 2016 at the rate of 6 per cent

Paper by Shardul Amarchand Mangaldas and Jindal Global Law School opposes digital service tax, currently imposed by individual countries, such as equalisation levy by India

In a Q&A, Pascal Saint-Amans, director at Centre for Tax Policy and Administration, OECD says global digital tax and digital service tax by individual countries can't co-exist

The G24 now pressed for a gradual removal of unilateral measures, simultaneous to revenue gains from the implementation of Pillar 1