Terming it as a fair, reasonable and non-discriminatory, India has defended the 2 per cent equalisation levy on non-resident e-commerce companies.
In a six-page written submission to the United States Trade Representative (USTR), India said the levy is applicable only for companies with annual revenues in excess of Rs 20 million (about $267,000), which is a low threshold aimed at exempting very small e-commerce operators globally, adding that India is ready to engage in bilateral discussions with the US on the matter.
“It does not discriminate against companies based in the United States as it applies equally to all non-resident e-commerce operators not having permanent establishment in India, irrespective of the origin of such companies,” India has said.
The USTR, last month, initiated investigations into taxes adopted or under consideration by 10 nations, including India, on revenues of US digital service companies like Netflix, Airbnb, Uber, LinkedIn and Spotify and companies were seeking further clarification.
“Far from targeting any US company or companies, the purpose of the Equalisation Levy is to ensure greater competitiveness, fairness, reasonableness and exercise the ability of governments to tax businesses that have a close nexus with the Indian market through their digital operations,” India said in its comments.
India assured the US that the equalisation levy is entirely consistent with India’’s commitments under the WTO and international taxation agreements.
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