Modi govt sees no major threat of US retaliation over Google tax


(This story originally appeared in on Jul 13, 2020)

NEW DELHI: US Trade Representative’s retaliatory action against France to counter the impact of equalisation levy on American technology companies hasn’t set alarm bells ringing in India, which is also under the scanner for taxing Google, Facebook, Amazon and Netflix.

The issue was discussed last week during an interaction with USTR Robert Lightheizer as American authorities had flagged their concerns soon after the levy in its expanded form kicked in earlier this year, sources told TOI. In fact, the US had sought to link the equalisation levy to the limited trade deal, which has been in the works for a year now.

Last month, USTR had announced an investigation against several countries including India, the European Union, the UK, Brazil and Indonesia after e-commerce came under the ambit of the tax. Official sources said. New Delhi is hopeful of sorting out the issue with both the commerce and finance ministry engaged in the deliberations.

The USTR has announced imposition of 25% duty on specified French products, including cheese and wine for imposing a 3% digital services tax. It has, however, suspended the application of the additional duties till January 6, 2021 to allow additional time for bilateral and multilateral discussions that could lead to a satisfactory resolution of this matter.

While tax experts saw the latest US action as a cue to countries that are under investigation, some of them also said that India has a strong argument as it believes that there should be some tax on business that is generated in the country. From April 1, the government has adopted a 2% equalisation levy which applies to non-resident companies, and covers online sales of goods and services to persons in India.

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