A report of tax manipulation has recently surfaced, and it seems that India, Italy, and Turkey are involved in various manipulations that are quite restrictive and burdensome for the US companies.
USTR’s Investigation
USTR began looking into the tax practices that these three countries adopt for digital services from American companies like Google, Facebook, Amazon, etc. back in the summer of 2020. USTR conducted this investigation on the basis of Section 301 of the US Trade Act. The reason was to study the impact of these taxes on American companies.
The results were pretty surprising as the USTR found great inconsistencies in the taxes that these countries were imposing on the US firms with the principles of international tax and trade.
Needless to say, this is having a bad impact on US trade and commerce.
India alone imposes an aggregate tax bill of over $30 million per annum on the US companies.
India has become the largest market for companies like Google and Facebook. In 2016, India started imposing digital services taxes on foreign companies. For the past year, it added more taxable categories to these services.
When USTR looked into the matter, it found out that New Delhi was imposing taxes on various digital services that do not even come under the ‘taxable’ services anywhere else in the world. The aggregate that the US companies have to pay in the form of taxes every year goes beyond $30 million including the taxes on things that are not taxed from their local companies.
USTR is looking to evaluate these details more.
Before taking any action against these countries and their tax manipulations against the US companies, the USTR believes that it should look more into the matter to evaluate all its available options. Until then, it is not going to take any action.
Since last year, USTR is also investigating countries like Austria, Brazil, the Czech Republic, the European Union, Indonesia, Spain, the United Kingdom, and France too for trade tax irregularities.
The reason for these discrepancies and irregularities is perhaps OECD’s negligence.
The Organization for Economic Cooperation and Development is responsible to formulate policies and strategies for economic, social, scientific, education, and biotechnological areas for its 37 member countries, as well as other non-member countries too. It determines some trade policies too which all countries adhere to, including the US. However, because of various delays and the absence of agreements from the OECD over different issues, many countries have started imposing taxes on other countries as per their liking and preferences.
I’m Ava Paul, an experienced news website author with a special focus on the entertainment section. Over the past five years, I have worked in various positions of media and communication at World Stock Market. My experience has given me extensive knowledge in writing, editing, researching and reporting on stories related to the entertainment industry.
