US agrees on digital service tax deal with India to end trade vendetta


New Delhi: In a sign of relief, the US Trade Representative’s (USTR) office will end its trade retaliation case against India, as Washington and New Delhi have agreed on a global tax deal transition arrangement that would roll back India’s digital services tax. .

According to the USTR, the agreement between the US Treasury and the Ministry of Finance is on the same terms as agreed with Austria, Britain, France, Italy, Spain and Turkey, but as of a later implementation date, Reuters report good.

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What is the Global Tax Deal Transition Regime?

The agreement is a result of an October agreement by 136 countries to withdraw their digital services taxes in principle, which on October 8 agreed to adopt a 15 percent global minimum corporate tax and give some tax rights on large profits. as part of a wider global tax deal. companies to market countries.

Under the agreement, countries have agreed not to impose a new digital services tax until the end of 2023 before the OECD tax deal goes into effect, but needs to make arrangements with the seven countries that have existing digital taxes, which will largely But Google is targeting US technology giants including Facebook. , and

How is this going to affect India?

Under this deal between Washington and New Delhi, all seven countries fall into a transition arrangement. The development comes after US Trade Representative Catherine Tai’s visit to India focused on increasing trade cooperation on agriculture and other commodities.

Under agreed withdrawal terms, countries can continue to collect digital service tax until the new regime comes into force. But for Turkey and European countries, any tax collected after January 2022 that companies must pay under the new rules will be credited against future tax liabilities of firms in those countries.

In India’s case, the starting date for those credits was pushed back to April 1, 2022, with an extension of three months from the end of 2023 if the OECD tax deal does not come into force by that time.