France's hopes lift as United States freezes tariffs over tech tax

France's hopes lift as United States freezes tariffs over tech tax

While France has led the charge on tech taxes, several other countries have introduced similar measures that worry the US, including Britain, India, Turkey and Brazil.

Digital Services Taxes (DST) imposed by India, Italy and Turkey discriminate against American companies and are out of sync with established global tax principles, the US Trade Representative's (USTR) office has said, rejecting New Delhi's contention of its equalisation levy, or the so-called 'Google tax', being non-discriminatory.

But he delayed announcing any specific tariff action and said he would continue to assess all available options.

The USTR says the taxes from the countries are "unreasonable" and "inconsistent with principles of worldwide taxation, including due to its application to revenue rather than income, extraterritorial application, and failure to provide tax certainty".

The assessment also noted that USTR report's assessment was flawed because it ignores that a territorial connection or nexus is inherent when the online sales and provision of e-commerce services is in the territory of India, and erroneously characterizes EL as a "corporate tax" while it is a levy on the revenues generated from a sale occurring in India.

"The levy does not discriminate against any us companies, as it applies equally to all non-resident e-commerce operators, irrespective of their country or residence", the ministry said. The government dismissed the allegations, saying the equalisation levy of 2% creates a level playing field. USTR estimated that the aggregate tax bill for American companies could top $30 million annually.

USTR started investigation in June a year ago against Equalisation Levy (EL), on the ground of Section 301 of the U.S. Trade Act of 1974.

UAE to reopen all land, sea, air ports with Qatar
Srivastava added: "We will continue to work with GCC countries for the strengthening of our bilateral cooperation". From Saturday, January 9, the UAE will resume cross-border travel and trade that had been halted since 2017.

Section 301 probe is initiated by USTR based on policy actions taken by its trade partners which are deemed discriminatory by its companies.

American companies like Amazon, Google, and Facebook, and inconsistent with global tax principles.

The goal of EL is to ensure fair competition, reasonableness and exercise the ability of governments to tax businesses that have a close nexus with the Indian market through digital operations, it added.

Introduced in 2016, the Equalisation Levy, initially was applicable to payments for digital advertisement services received by non-resident companies without a permanent establishment here, if these exceeded ₹1 lakh a year. Similar determinations were also made against Italy and Turkey on 6th Jan, 2021, itself.

The Internet Association, representing Google, Amazon, Facebook, and Ebay, in its comment to the USTR over the Section 301 investigation, had pressed for retaliatory action against India for DST, arguing that the equalisation levy was unreasonable and discriminated against United States companies. "This is discrimination in its clearest form", the USTR's report said.

Besides, India's tax covers a broader scope of services than other DSTs adopted around the world, expanding the universe of U.S. companies subject to DST, and increasing the tax burden United States companies face, it said.

The USTR report further pointed out India's DST burdened US companies by subjecting them to double or in some cases multiple layers of taxation.

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