The US and India have reached a compromise on a transition from India’s “equalization levy” digital services tax towards the terms of the October 8 multilateral agreement on new international taxing rules, according to a November 24 US Treasury announcement.
The announcement does not specify the terms of the agreement between the two countries but states that the “compromise represents a pragmatic solution” and that the countries “have committed to working together through constructive dialogue on this matter.”
In accordance with this agreement, the US will terminate retaliatory trade measures threatened in response to India’s equalization levy.
The Indian government had introduced the equalization levy last year and announced proposed expansions earlier this year.
In June, the US had announced retaliatory tariffs against India and several other countries in response to their adoption of digital taxes, which the US deemed to be discriminatory against US companies. Imposition of the tariffs was suspended pending agreement on a multilateral solution.
The US agreement with India with respect to phasing out its digital tax follows a similar November 22 agreement with Turkey and an earlier October 21 agreement with Austria, France, Italy, Spain, and the UK.
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