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India moves to tax global tech giants, eyes OECD meet

The Central Board of Direct Taxes (CBDT) eyes companies invoicing revenues out of India with operations here.

Updated: Aug 20, 2019, 10.52 AM IST
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(This story originally appeared in on Aug 20, 2019)
BENGALURU: The Central Board of Direct Taxes (CBDT) is looking at new ways to tax global tech giants who invoice their revenues out of India while maintaining operations in the country with minimum profits. The tax department will be consulting at a meeting next month of the Organisation for Economic Co-operation and Development (OECD), a senior official told TOI. The move comes at a time when developed internet economies across the world are exploring new ways to tax large technology companies.

“All countries are trying to find a consensus on major tech companies. There is a meeting in the first week of next month in the OECD in this regard where we will be consulting on this issue,” said the official of the tax department. India is a key partner country with the OECD, which is headquartered in France. According to this official, India is treading cautiously on the matter and wants to bring laws in accordance with international practice.

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These consultations are part of CBDT’s measures to amend changes in the tax law that would enable the government to impose higher tax from Indian entities of the Big Tech players. Earlier in April, TOI reported CBDT had recommended changes in the process of taxing multinational companies (MNCs) who have local operations here. India can tax the profit made by the Indian entity of a foreign company, but the same can be imposed only on what is attributed as profit in these Indian entities.

“We are discussing multiple new ways to define that (the attribution), including a maximum revenue threshold, beyond which it has to be reported under an India firm,” the government official added. Companies like Google, Amazon, Uber and Facebook are part of Big Tech.

Incidentally, this comes at a time when startups who pay an equalisation levy of 6% are also keen that billing is done in India. According to a survey by LocalCircles, a community driven engagement platform, 82% of startups want billing from Indian offices of these foreign companies to be made mandatory by the government. Emails sent to companies like Facebook and Google did not elicit any response. An Uber India spokesperson declined to comment on the matter.

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