Digital Tax The Road Ahead

Even as india increases the scope of the equalisation levy, the us had initiated a probe against 10 countries for imposing taxes on digital services. This could face us reprisal, going forward

- Dipak Momdal

STORY SO FAR

March 2020: India expands the scope of Equalisation Levy by imposing a 2 per cent tax on online sales by overseas e-com firms

June 3: The US initiates probe against 10 countries for planning/ taxing digital companies

June 18: The US withdraws from talks on digital tax with European countries

July 7: The US government threatens to impose a 25 per cent tariff on goods imported from France in response to the latter’s 3 per cent digital services tax

The United States recently threatened France with a 25 per cent tariff on goods imported from the country if the latter went ahead with its 3 per cent tax on digital services provided by foreign-based tech companies. It had slapped a 25 per cent tariff on import of French wine last year for a similar reason, forcing the French government to defer the implementation of its digital services tax by almost a year (from January 1 to December 31, 2020).

The US, home to many tech giants at the receiving end of the digital tax planned by France and other countries, is leaving no stone unturned to ensure that its technology companies don’t end up being the worst hit. Barely a month ago, it had pulled out of talks on finalising a framework to tax digital companies, besides initiating probes against 10 countries, including India, which have levied or plan to levy taxes on digital services.

India recently expanded the scope of the Equalisation Levy, or digital tax, to the sale of goods and services in the country by overseas e-commerce firms.