By Doug Connolly, MNE Tax
A global group of 13 technology and business trade associations sent a letter on March 19 to the Indian Parliament urging it not to adopt amendments to the equalisation levy announced in the government’s proposed Finance Bill 2021–22. The authors include the Japanese trade association, Keidanren; the National Foreign Trade Council; the US Chamber of Commerce; and the Asia Internet Coalition.
The equalisation levy, India’s tax on certain digital transactions, took effect last year. The letter contends that the new amendments would bring numerous offline transactions within the scope of the equalisation levy if certain aspects of those transactions happen online, such as placing an order or making a payment.
“This expansion will capture brick and mortar businesses as well as other companies that traditionally operate offline, and subject them to the Equalisation Levy simply because their transactions involve online payments or are concluded via email,” the letter said.
The group also objects to an amendment that it says would include the entire amount of a payment received by an e-commerce operator within the levy’s scope, even when the operator is simply facilitating a transaction with a third party and receiving only a portion of the compensation.
The amendments currently being considered to the levy would create a range of compliance issues, result in significant challenges for businesses operating in India, and discourage investment in the country, they assert.
The group urges the Indian Parliament to drop the amendments and stick to commitments to address digital tax issues through a multilateral OECD approach.
Doug Connolly
Doug Connolly is Editor-in-Chief of MNE Tax. He has more than 10 years of experience covering tax legal developments, previously working with both a Big Four firm and a leading legal publisher. He holds a law degree from American University Washington College of Law.
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