India has introduced an enabling provision that will make an overseas platform that advertises, streams or sells goods to an Indian IP address taxable in the country. This marks the first step toward a global digital tax and means that India will be ready to implement the levy once the Organisation for Economic Cooperation and Development (OECD) framework, currently under discussion, is finalised.
The government will then be able to tax revenues of ecommerce firms such as Amazon, Alibaba and Ebay selling goods or services based on data collected from residents and those engaged in targeted advertisements such as Facebook and Google, besides streaming services like Netflix. Those monetising data, through cookies for instance, will also be covered.
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India had imposed a 6% equalisation levy, sometimes referred to as the ‘Google tax’, in 2016. But this latest development is a significant move toward capturing tax on incomes earned by overseas companies through consumption by Indians.
Source: Economic Times
