MUMBAI: In what could lead to fresh set of differences with India, the US has launched an investigation on how some of the countries including India is taxing digital companies such as Google, Twitter and Facebook in India.Currently, India levies 6% tax in the form of equalisation levy on digital companies advertising revenue. Apart from that the Indian government had recently also expanded the scope of the equalisation levy -; imposed on cross border digital transactions in 2016 in a bid to tax internet giants’ digital advertising revenues from India to include any purchase by an Indian or India-based entity through overseas ecommerce platform with effect from April 1. Now, many firms fear that all kinds of transactions including hotel bookings, software purchase and even buying certain components from overseas could come under the gamut of equalisation due to the way the law is worded, tax experts said.Now additional 2% equalisation levy is applicable on overseas ecommerce purchases by India-based companies will be imposed on all overseas transactions completed online.The probe announced Tuesday encompasses digital taxes that have been either adopted or are under consideration in Austria, Brazil, the Czech Republic, the EU, India, Indonesia, Italy, Spain, Turkey, and the U.K., according to the U.S. Trade Representative”;s office in Washington. The move seeks to determine whether levies on electronic commerce discriminate against American tech giants like Apple Inc., Alphabet Inc.”;s Google and Amazon.com Inc, Bloomberg reported Tuesday.The government in 2018 had said that global digital companies have a large consumer base in India but don”;t pay enough taxes domestically. There is a global push to bring the digital giants under the ambit of local taxes. Many such companies deliberately base themselves in low-tax jurisdictions. India has come up with significant economic presence framework, whereby it can tax global giants taking their user base into consideration, a move objected by the US.Some of the global players may also be looking to structure their India entities, said people in the know. Some of them are looking to create new domestic companies, change the ownership pattern to become compliant with new tax laws that the country may frame in the wake of a global agreement on taxation of such multinationals.
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