Piyush Goyal suggests customs duty on digital exporters
GENEVA: India’s move to play hard on extending tax moratorium on e-commerce, including transmission of films, printed matter such as books and journals, video games, software, movies and music, has taken the developed world by surprise with government officials suggesting that electronic transmission should come under the tax net as developing and poor countries are losing upwards of $15 billion annually.
After the recent decision at OECD on common minimum tax on MNCs avoiding tax across geographies, commerce & industry minister Piyush Goyal on Wednesday suggested a similar move for e-commerce.
“I would like to suggest a similar effort be made on custom duty component across the world to at least allow the developing countries to share such small portion of the super profits and huge benefits that these few big tech companies are enjoying,” he said at WTO. He said global digital giants were avoiding levies.
“While small exporters of physical products like textiles, handloom, clothing, foot- wear, mainly based in developing countries, are facing both domestic taxes as well as customs duties, the big digital exporters are being exempted from custom duties due to the moratorium. ”
While the moratorium has been in place since 1998, when India was a small market, and has been renewed at every subsequent WTO ministerial meeting, the go- vernment believes that it is now time to impose tax as developed countries have been reaping the benefit, especially with enhanced electronic transmission post-Covid.
“While the scope is to be decided, it could include everything from Netflix to telemedicine, e-commerce and digital payments where electronic transmission is involved,” said Biswajit Dhar, a professor in JNU. In case the moratorium is not extended, WTO members will have to sit down and define the scope, which is not going to happen overnight given the deep rupture in the global body.
Although many see it as a bargaining chip to get a better deal in some other area during the negotiations here, officials indicated the moratorium must be lifted sooner or later. According to WTO rules, even one country can hold back a decision on any issue.