The Road Ahead
The united States recently threatened France with a 25 per cent tariff on goods imported from the country if the latter went ahead with its 3 per cent tax on digital services provided by foreign-based tech companies. It had slapped a 25 per cent tariff on import of French wine last year for the similar reason, forcing the French government to defer the implementation of its digital services tax by almost a year (from January 1 to December 31, 2020).
The US, home to many tech giants at the receiving end of the digital tax planned by France and other countries, is leaving no stone unturned to ensure that its technology companies don’t end up being the worst hit. Barely a month ago, it had pulled out of talks on finalising a framework to tax digital companies, besides initiating probes against 10 countries, including India, which have levied or plan to levy taxes on digital services.
India recently expanded the scope of the Equalisation Levy, or digital tax, to the sale of goods and
