DAILY NEWS ANALYSIS

GS-II : International Relations U.S.A

08 January, 2021
10 Min Read

USTR slams India’s digital tax

Digital services taxes adopted by India, Italy and Turkey discriminate against U.S. companies and are inconsistent with international tax principles, the U.S. Trade Representative’s office said, paving the way for potential retaliatory tariffs.
USTR, releasing the findings of its “Section 301” investigations into the digital taxes, said it was not taking specific actions at this time, but “will continue to evaluate all available options.”
The probes are among several still open USTR Section 301 investigations that could lead to tariffs before President Donald Trump leaves office or early in the administration of President-elect Joe Biden.

‘Tax impacts U.S. firms’

USTR has concluded the digital taxes imposed by France, India, Italy and Turkey discriminate against big U.S. tech firms, such as Google, Facebook, Apple and Amazon.com.
In the latest report, the USTR also said the Indian, Italian and Turkish taxes were “unreasonable” because they are “inconsistent with principles of international taxation, including due to its application to revenue rather than income, extraterritorial application, and failure to provide tax certainty.

‘Does not discriminate’

India on Thursday said the 2% equalisation levy does not discriminate against U.S. companies as it applies equally to all non-resident e-commerce operators irrespective of their country of residence, Press Trust of India reported.
In a statement, the Commerce and Industry Ministry said the purpose of the levy is to ensure fair competition, and reasonableness and to exercise the ability of governments to tax businesses that have a close nexus with the Indian market through their digital operations.
It also does not have extraterritorial application as it applies only to the revenue generated from India, the ministry said.

Source: TH

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