Washington, Nov 25 (MNN) United States Trade Representative’s office has welcomed announcements by Indian Finance Ministry and the US Treasury Department that both nations have reached a political agreement on treatment of Digital Services Taxes (DSTs) during the interim period prior to full implementation of Pillar 1 of Organisation for Economic Cooperation and Development (OECD) agreement.
Under this agreement — and consistent with and applying the same terms as the earlier agreements with Austria, France, Italy, Spain, the United Kingdom, and Turkey — in defined circumstances the liability from India’s equalisation levy on e-commerce supply of services that US companies accrue in India during the interim period will be creditable against future taxes accrued under Pillar 1 of the OECD agreement.
The period during which the credit accrues will, however, be from April 1, 2022 until either the implementation of Pillar 1 or March 31, 2024 (whichever is earlier).
In return, the US will terminate the currently-suspended additional duties on goods of India that had been adopted in the DST Section 301 investigation.
USTR is proceeding with the formal steps required to terminate this Section 301 trade action, and in coordination with Treasury, will monitor implementation of the agreement going forward.
The United States has now reached agreement regarding the treatment of DSTs during the transitional period prior to entry into the force of Pillar One of the OECD’s historic agreement on global taxation in all seven of the DST Section 301 investigations.
The US Treasury on Wednesday announced the agreement on transition from existing Indian equalization levy to a new multilateral solution agreed to by the OECD-G20 Inclusive Framework.
Last month, the agreement was reached between 137 countries of the OECD-G20 Inclusive Framework – representing nearly 95 per cent of the world’s GDP – on a two Pillar package of reforms to the international tax framework to be implemented in 2023, the Treasury statement said.
These reforms will provide for a tax framework that is fairer, more stable, and better equipped to meet the needs of a 21st century global economy, it claimed.
In support of that agreement, the US supported India’s announcement of their agreement to a transition to the new multilateral solution, and both committed to working together through constructive dialogue on this matter.
Overall, this political agreement is yet further demonstration of our commitment to working together to reach consensus, and to deliver far-reaching multilateral reforms that help support our national economies and public finances, the US Treasury said.