March 21, 2021

DELHI – A global coalition of tech and business trade associations sent a letter to Chairperson for the Parliamentary Standing Committee on Finance Shri Jayant Sinha respectfully urging the Parliament to drop the amendment to India’s Equalisation Levy included in the Government of India’s proposed Finance Bill to the Union Budget 2021-22. The amendment would create significant challenges for all businesses operating in India, further exacerbating the detrimental impact of a measure at odds with India’s ongoing commitment to the multilateral negotiations at the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework to address the tax challenges arising from the digitalisation of the global economy.

In the letter, the associations note concerns about the disproportionate effect and potentially unintended consequences of the provisions offered by the amendment and the intent to apply such changes retroactively.

“It is in the spirit of support for a multilateral solution that we encourage the Parliament to refrain from adopting the amendment proposed to sections 163-165A of the Finance Act, 2016, which, despite its characterization by the Ministry of Finance as clarifications and an amendment, would fundamentally expand the scope of the Equalisation Levy and generate a range of new compliance questions and concerns,” the associations wrote. “The associations urged the Government of India and the business community invested in India to engage in a robust dialogue to ensure that policies can achieve the Government of India’s intended short-term and long-term objectives, and to include the firms affected by the measure in those discussions.

They also encouraged the Government of India to prioritise India’s continued support for the multilateral negotiations to address the tax challenges arising from the digitalisation of the global economy. They noted that the G20 Finance Ministers – including Finance Minister Nirmala Sitharaman – reiterated as recently as February 26 their support for the Inclusive Framework’s timeline of realising a multilateral, consensus-based agreement by mid-2021.

Signers of the letter include the Information Technology Industry Council (ITI), National Foreign Trade Council, Allied for Startups, Asia Pacific MSME Trade Coalition, Asia Internet Coalition, DIGITALEUROPE, Keidanren, Internet and Mobile Association of India (IAMAI), Japan Electronics and Information Technology Industries Association (JEITA), Japan Machinery Center for Trade and Investment, U.S. Chamber of Commerce, U.S.-India Business Council, U.S.-India Strategic Partnership Forum, and techUK.

Read the full letter here.