USTR finds India’s digital services levy discriminatory

The US Trade Representative’s (USTR) office has said that the Digital Services Taxes (DST) imposed by India, Italy and Turkey discriminate against American firms and are out of sync with established international tax principles. A sign of relief for India is that the USTR held off potential retaliatory tariffs against the country’s equalisation levy, or the so-called ‘Google tax’. It found that of the 119 companies that are likely liable under the tax regime, 86 or 72% were American companies.

India is not planning to discontinue this levy anytime soon, though it may review the impost once there is a global consensus on such taxation under a G20 framework that is being worked out. India had tried to reassure the US that its equalisation levy was “non-discriminatory”. “The underlying policy objective and application of India’s equalisation levy is to ensure that neutral and equitable taxation is applicable to e-commerce operators that are resident in India or have a physical presence in India and those that are not resident in India,” it had asserted.