US Trade Body Proposes Retaliatory Trade Actions Against India, Other Countries

The USA Commerce Consultant (USTR) has proposed retaliatory commerce actions towards India and sure different nations which have imposed or are contemplating equalisation levy/digital companies tax on e-commerce firms. It has issued notices looking for public feedback on proposed commerce actions towards six nations, together with India. The USTR, in a press release, stated it “is continuing with the general public discover and remark course of on potential commerce actions to protect procedural choices earlier than the conclusion of the statutory one-year time interval for finishing the investigations.”

In keeping with a USTR doc pertaining to India, it has requested “written feedback relating to a possible commerce motion in reference to the Part 301 investigation of India’s Digital Companies Tax.” On this, sources within the authorities on Saturday stated India will look at the proposed motion with the stakeholders involved and would take appropriate measures, conserving in thoughts the commerce and business curiosity of the nation and total curiosity of its folks.

In June 2020, the US initiated an investigation below Part 301 of the US Commerce Act, 1974 towards the taxation on digital companies adopted or into account by India, Italy, Turkey, UK, Spain and Austria. The report of this investigation in January this yr concluded that India’s equalisation levy, by its construction and operation, discriminates towards US digital firms. It was strongly opposed by India.

The US had requested for bilateral consultations on this matter, and India had submitted its feedback to the USTR on July 15, 2020. It had additionally participated in a bilateral session held on November 5, 2020. “Consequent to the willpower and findings, now USTR has proposed a retaliatory motion below Part 301 towards India”s equalisation levy, together with different nations,” a supply stated.

USTR Katherine Tai has acknowledged that the US is dedicated to working with its buying and selling companions to resolve its considerations with digital companies taxes and deal with broader problems with worldwide taxation. “The US stays dedicated to reaching a global consensus by way of the OECD course of on worldwide tax points. Nonetheless, till such a consensus is reached, we are going to preserve our choices below the Part 301 course of, together with, if needed, the imposition of tariffs,” Tai has stated.

In keeping with the USTR doc, the proposed motion consists of imposition of further advert valorem tariffs on sure merchandise from India, resembling sea meals, bamboo merchandise, semi-precious and treasured stones, furnishings, cork, and cigarette papers.

“Particularly, USTR proposes to impose further tariffs of as much as 25 per cent advert valorem on an combination stage of commerce that may gather duties on items of India within the vary of the quantity of DST (digital companies tax) that India is predicted to gather from US firms,” it stated.

Preliminary estimates point out that the worth of the DST payable by US-based firm teams to India shall be as much as about USD 55 million per yr, it added. India has earlier acknowledged that the equalisation levy is just not discriminatory and solely seeks to make sure a level-playing area with respect to e-commerce actions undertaken by entities with everlasting institution in India.

It was additionally clarified by India to the US that the levy was utilized solely prospectively, and has no extra-territorial software, since it’s primarily based on gross sales occurring within the territory of India by way of digital means.