USTR to probe India’s digital tax

NEWDELHI: The Trump administration has launched investigations into digital services taxes levied or under consideration by 10 countries, including India, to determine whether they discriminate against American tech companies, though people familiar with developments said New Delhi has no plans to change its levy.

The investigations announced on Tuesday by the US Trade Representative (USTR) will cover digital taxes either adopted or under consideration in the European Union and 10 countries, including Austria, Brazil, India, Indonesia, Italy and the UK.

The people cited above, who spoke on condition of anonymity, said India has no plans to roll back the tax on e-commerce transactions introduced in the 2020 budget in February.

“These investigations are just the start of a process. It’s not as if some actions have already been taken by the US,” said one of the people cited above.

“Everything will depend on the findings of the investigations.

So, it’s too early to say,” the person added.

The USTR’S probe, called a “section 301 investigation” because it is conducted under Section 301 of the 1974 Trade Act, will determine whether taxes on electronic commerce by the EU and the 10 countries discriminate against US tech giants such Apple, Google and Amazon.

“This provision gives the USTR broad authority to investigate and respond to a foreign country’s action which may be unfair or discriminatory and negatively affect US commerce,” USTR said in a statement.

Such probes by USTR can take months before the US administration decides whether to retaliate against taxes through tariffs or other measures.

Amit Maheshwari, a partner at AKM Global, a tax and consulting firm, said: “The US investigation initially will focus on whether the digital services taxes (DSTS) discriminate against US companies, they are retroactive, and they reflect unreasonable tax policy, which would be when the DSTS may d i v e r g e f r o m nor ms reflected in the US tax system and the international tax system in several respects.”