According to a finance ministry official on Thursday, India would not join a worldwide corporate tax agreement targeted at extremely profitable multinational corporations unless its reservations about dispute resolution and the handling of withholding tax are resolved.
The "Pillar 1" agreement, which is a component of a two-part global tax agreement for 2021, seeks to replace unilateral digital services taxes (DSTs) by establishing a new system for sharing taxation rights among multinational corporations, including Apple and Alphabet's Google and Amazon.com.
One of the senior finance ministry officials, Revenue Secretary Sanjay Malhotra, expressed optimism that the agreement will be concluded soon and stated that India is "constructively engaging" with all the nations for the successful conclusion of "Pillar 1".
"However, it cannot be at the cost of our own interests."
In May, U.S. Treasury Secretary Janet Yellen stated that discussions were at a standstill and accused India of refusing to participate on matters that were crucial to American interests.
"Unless our recommendations are taken into consideration and we find a workable solution that pleases us. In an interview with Reuters, Malhotra stated, "We cannot agree to the formulation."
India opposes the use of international arbitration for any disputes pertaining to taxes, among other things.
India suggested removing a 2% equalisation fee on digital service providers as a first step, which would come at an annual cost to the Indian government of around 25 billion rupees ($300 million).
The June 30 deadline for a worldwide tax agreement has long since passed, and states are now turning to the Group of 20 finance ministers' conference in Brazil for further progress.
High stakes are involved. In the event that final conditions cannot be agreed upon, a number of nations may decide to reimpose their tariffs on American tech companies and run the possibility of facing fines on billion-dollar exports to the United States.
Although the United States has not ratified Pillar 2, several nations have already begun implementing it. It establishes a worldwide minimum tax of 15% on multinational corporations.
According to the official, India has established a group to draft regulations for Pillar 2's execution.
(Source:www.marketscreener.com)
The "Pillar 1" agreement, which is a component of a two-part global tax agreement for 2021, seeks to replace unilateral digital services taxes (DSTs) by establishing a new system for sharing taxation rights among multinational corporations, including Apple and Alphabet's Google and Amazon.com.
One of the senior finance ministry officials, Revenue Secretary Sanjay Malhotra, expressed optimism that the agreement will be concluded soon and stated that India is "constructively engaging" with all the nations for the successful conclusion of "Pillar 1".
"However, it cannot be at the cost of our own interests."
In May, U.S. Treasury Secretary Janet Yellen stated that discussions were at a standstill and accused India of refusing to participate on matters that were crucial to American interests.
"Unless our recommendations are taken into consideration and we find a workable solution that pleases us. In an interview with Reuters, Malhotra stated, "We cannot agree to the formulation."
India opposes the use of international arbitration for any disputes pertaining to taxes, among other things.
India suggested removing a 2% equalisation fee on digital service providers as a first step, which would come at an annual cost to the Indian government of around 25 billion rupees ($300 million).
The June 30 deadline for a worldwide tax agreement has long since passed, and states are now turning to the Group of 20 finance ministers' conference in Brazil for further progress.
High stakes are involved. In the event that final conditions cannot be agreed upon, a number of nations may decide to reimpose their tariffs on American tech companies and run the possibility of facing fines on billion-dollar exports to the United States.
Although the United States has not ratified Pillar 2, several nations have already begun implementing it. It establishes a worldwide minimum tax of 15% on multinational corporations.
According to the official, India has established a group to draft regulations for Pillar 2's execution.
(Source:www.marketscreener.com)