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ASR Calls For Delay To India's New Digital Tax2020-04-30

ASR joined a global coalition of nine business associations in a letter to India’s Finance Minister Nirmala Sitharaman, seeking delay in implementation of the recent expansion of India’s Equalisation Levy, in order to hold formal stakeholder consultations on the measure and allow for ongoing OECD negotiations to continue.

The letter notes that the limited timeframe within which India’s expansive new levy was approved and took effect allowed for neither the dialogue nor the significant structural changes necessary for the broad range of impacted firms to effectively implement the measure.

The letter states: “A delayed implementation would permit such a dialogue to take place and would play a meaningful role in ensuring that the Government of India can most effectively and equitably achieve its policy objectives.

Furthermore, a delay would underscore India’s continued support for the ongoing, multilateral negotiations at the OECD on the taxation challenges arising from the digitalisation of the global economy. We greatly appreciate your consideration of this request and stand ready to work with you and your Government.”

Background: On March 23, the Indian Parliament passed an amended national budget including an expansion of scope of India’s existing Equalisation Levy to establish a new, two percent levy on the online sale of all goods and services into India by non-resident e-commerce operators. The new legislation entered into force on April 1.

The associations signing the letter represent a wide range of companies, from multinationals to infant startups and include: Allied for Startups, Asia Internet Coalition (AIC), Asia-Pacific MSME Trade Coalition (AMTC), Australian Services Roundtable (ASR), DIGITALEUROPE, Information Technology Industry Council (ITI), Japan Electronics and Information Technology Industries Association (JEITA), US Chamber of Commerce, and the US-India Business Council (USIBC).

The letter may be read in full at this link. A background paper on the Equalisation Levy Expansion is also available here.

Global press coverage of the letter may be read at the following links:

Reuters: Global Lobbying Groups Call for Delay to India’s New Digital Tax (wire)
Hindu BusinessLine: Keep ‘Google Tax’ on e-Commerce Companies in Abeyance For Now: Industry Bodies
Business Standard: Global Business Bodies Demand Deferring of Equalisation Levy for 9 Months