India, US extend 2% digital tax on e-commerce deal until June 2024 – Firstpost

India and the United States have decided to extend the 2 percent equalization tax, also known as digital tax, on e-commerce goods and services until June 30, the Ministry of Finance announced on Friday.

As part of a sweeping reform of the international tax system, India and the United States joined 134 other members of the OECD/G20 Framework (including Austria, France, Italy, Spain and the UK) in reaching an agreement on October 8, 2021, on a two-pillar statement a solution aimed at meeting the tax challenges resulting from the digitization of the economy.

On October 21, 2021, the United States and Austria, France, Italy, Spain, and the United Kingdom reached a political compromise on a transitional approach to unilateral measures applicable during the Pillar I implementation period.

On November 24, 2021, India and the United States agreed that the same terms and conditions that apply under the October 2021 Joint Statement with respect to India’s 2% e-commerce services levy and the U.S. trade action on the said levy will apply between India and the United States.

This agreement was valid from 1 April 2022 until the date of implementation of Pillar 1 or 31 March 2024, whichever comes first.

On 18 December 2023, the Inclusive Framework issued a statement calling for the finalisation of the text of the multilateral Pillar I convention by the end of March 2024, with a view to organising a signing ceremony by the end of June 2024.

On February 15, 2024, the United States and Austria, France, Italy, Spain, and the United Kingdom decided to extend the political compromise set out in the October 21, 2024, joint statement until June 30, 2024.

“In the light of the above developments, India and the US have decided to extend the validity of the agreement reflected in the November 24 declarations to June 30, 2024. All other conditions of the transitional approach remain the same,” the finance ministry said in a statement.

India and the United States will remain in close contact to ensure mutual understanding of commitments and make efforts to resolve all issues in this regard through constructive dialogue, it added.

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