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The United States’ decision to postpone by six months the imposition of retaliatory import tariffs on certain items from India and five other countries under Section 301 investigations on Digital Service Taxes (DSTs) could be linked to the broader effort for a global understanding on taxation of e-commerce.
The issue of taxation of e-commerce companies is not just specific to India but related to many other nations including developed countries and there are attempts to resolve it at the OECD platform, said Commerce Secretary Anup Wadhawan.
“It is all a part of broader effort to reach a global understanding on taxation definition given the recent development and growth in e-commerce. I think this is all moving forward in a conducive manner. The world will reach a common understanding on the issue,” he said addressing the media.
US Trade Representative Katherine Tai announced the conclusion of the one-year Section 301 investigations of DSTs adopted by Austria, India, Italy, Spain, Turkey, and the United Kingdom on Wednesday.
"The final determination in those investigations is to impose additional tariffs on certain goods from these countries, while suspending the tariffs for up to 180 days to provide additional time to complete the ongoing multilateral negotiations on international taxation at the OECD and in the G20 process," per a release for the USTR office.
The US is focused on finding a multilateral solution to a range of key issues related to international taxation, including our concerns with digital services taxes, according to Tai.
"The postponement of the tariff is similar to the DST investigation into France, where USTR indefinitely postponed tariffs after the first six month delay to pursue negotiations at the OECD," a source tracking the matter told BusinessLine.
The US had proposed to impose retaliatory tariffs up to 25 per cent on a wide variety of Indian products ranging from shrimps and basmati rice to gold and silver items in response to digital services tax of 2 per cent imposed by India on non-resident e-commerce operators in March 2021.
The USTR is of the view that India’s digital services tax, also known as equalisation levy or Google tax, is unreasonable or discriminatory and burdens or restricts US trade.
Estimates made by the USTR value the digital services tax payable by US-based company groups to India at approximately $55 million per year.
“The United States remains committed to reaching a consensus on international tax issues through the OECD and G20 processes. Today’s actions provide time for those negotiations to continue to make progress while maintaining the option of imposing tariffs under Section 301 if warranted in the future,” Tai said.
Section 301 of the US trade law allows the country’s President to take all appropriate action, including tariff-based and non-tariff-based retaliation, to obtain the removal of any act or policy that it finds unjustified, unreasonable, or discriminatory.
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