As we all know, India is the first nation to apply a tax to digital taxation by introducing the 6% equalization levy in June 2016, on the advertising income of multinational web industries. Now, on the basis of the response from senior tax professionals, the government is broadening the realm of the levy.
The government has yet not revealed anything regarding rising the equalization levy, but as per the officials, the same is assumed to be launched in the coming period.
According to the new description, the government is seeking a tax levy of 6% on all online multinational industries that receive profits from India. As said by experts, equalization levy, popularly known as Google tax, can soon seize the likes of Microsoft, Netflix, Amazon Web Services, IBM, and Apple, which offer online services in India.
Even though the equalization levy is 6%, in reality, the burden can be up to 7–8% primarily owing to the grossing up of tax. In the present situation, the equalization levy is valid only on online advertisements, impacting a few organizations such as Google, Yahoo, Facebook, and LinkedIn. Many of these organizations, except LinkedIn, forward the extra charge to their consumers.
According to the resources, the government desires to widen the range of the equalization levy in a phased approach and this can even involve the installing of applications on smartphones. “It was previously determined that by December of this year the tax would be valid on apps purchased on platforms such as Apple or Google. Nevertheless, owing to other regulatory transforms, equalization levy was delayed for the budget,” said an official who knows the matter.
As per the industry experts, the equalization levy enables multinationals to assert credit in their own country. However, at present, no other country has implemented such tax, so asserting such a credit would be difficult for multinationals. And in such cases, the companies would impart the price to their advertisers and customers.
Thus, the broadening of levy can put a great impact on the companies and customers as well. What do you think?