The US has decided to launch an investigation against India for levying a 2 per cent digital tax on technology majors, to determine if it “unfairly targets” American companies like Amazon, Google, and Facebook.
The US Trade Representative (USTR) office will also conduct the Section 301 probe against nine others, including Austria, Brazil, Indonesia, Italy, Spain, Turkey, the Czech Republic, the UK, and the EU, for levying or considering digital services taxes “discriminating against US companies”.
Section 301 of the US Trade Act empowers the USTR to investigate a trading partner's policy action that may be deemed unfair or discriminatory and negatively affects US companies.
New Delhi strongly opposed the move, arguing that its digital tax measures fell within its sovereign rights and were in no way designed to discriminate against US firms.
“The equalisation levy imposed by India does not violate World Trade Organization rules and we are well within our rights to impose digital tax. The policy is quite broad and in no way discriminates against US companies. The US should rather focus on arriving at a consensus solution to tax digital companies at the ongoing discussions under the OECD Base Erosion and Profit Shifting (BEPS) framework,” a government official said.
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