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Setback for India as WTO extends nil tax on e-transmissions

As per an UNCTAD study, India’s potential loss of revenue by not taxing electronic transmissions is around $500 million every year. Of the total $8 billion of potential tax losses projected for 58 developing countries, Mexico, Thailand, Nigeria, India, China and Pakistan face the highest losses, revealed the research paper.

, ET Bureau|
Dec 11, 2019, 07.09 AM IST
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Agencies
WTO
“While the extension is of only six months, as against two years earlier, India will now have to make a larger coalition to be able to push the issue,” said an official aware of the development.
NEW DELHI: Developing countries including India suffered a setback on Tuesday as the World Trade Organization (WTO) decided to extend the practice of not imposing customs duty on electronic transmissions by six months to June 2020.

India and South Africa had argued that the ecommerce moratorium led to loss of revenue as it gave such transmissions immunity from taxation in the WTO.

As per an UNCTAD study, India’s potential loss of revenue by not taxing electronic transmissions is around $500 million every year. Of the total $8 billion of potential tax losses projected for 58 developing countries, Mexico, Thailand, Nigeria, India, China and Pakistan face the highest losses, revealed the research paper.

“While the extension is of only six months, as against two years earlier, India will now have to make a larger coalition to be able to push the issue,” said an official aware of the development.

The US, Singapore and South Korea have demanded that the temporary moratorium be made permanent amid fears that countries would indiscriminately impose taxes.

“India’s commitments in the WTO allow it to discriminately tax ecommerce transmissions. This means India can tax imported transmissions even as it exempts the local ones. Same is the case with many countries,” said an expert on trade issues, who did not wish to be identified.

The moratorium was last extended at the 2017 ministerial conference in Buenos Aires until the next ministerial, which was originally planned for December 2019.


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