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India backs away from digital services tax after US pressure


India has agreed to wind back the two per cent Equalisation Levy it charges foreign e-commerce companies, and the USA has withdrawn sanctions it imposed to protest the levy.

The levy was introduced in 2016 as a means of ensuring India could collect more tax. The nation's government introduced it because big e-commerce players had employed legal-but-cynical tax minimisation schemes that saw them conduct purchases made in India with offshore entities – even though goods were sold in India, to residents of India.

The measure was aimed squarely at US-based companies such as Amazon.com, but also at India-based companies like FlipKart (which is owned by US-based Walmart).

The USA opposed India's levy and similar taxes imposed by Vietnam, The Philippines, and Indonesia, arguing they discriminate against its businesses.

In July 2021, the Biden Administration fought back by imposing tariffs on nations that implement digital services taxes, but immediately ...


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