INDIA BACKS OECD MOVE ON DIGITAL TAX

NEWDELHI: The Union government has signalled its support for a plan by OECD nations to make big digital companies such as Facebook and Google pay taxes in countries where they have a significant number of users, a proposal that could lead to a revenue windfall for a country like India that has an online population of millions.

OECD, or the Organisation for Economic Co-operation and Development (OECD), includes some of the most prominent economies among its members and the proposal, experts said, would alter fundamental international tax principles but could face opposition from the firms that are mostly based in the United States of America.

According to two government officials who asked not to be named, India has given an “in-principle” approval to the proposal. “The government has two basic concerns with regard to global online giants and e-commerce companies such as Amazon, Flipkart, Google, Twitter and Facebook – the loss on account of tax revenue and the loss due to unregulated information.

The OECD proposal is a step in the right direction, but it will address only one issue. The second issue relates to such companies storing data in countries were they operate is also important,” one of the official said.

The second official, working for one of the ministries overseeing economic matters, said the OECD’s proposal would reinforce India’s demand of having an “equitable” share in taxes on revenues earned.