India won’t make sovereign commitment on digital services tax

In a move that could delay the implementation of a global tax deal, India and other developing countries under the G24 grouping have objected to the proposal of making sovereign commitments to not introduce any future digital services tax like equalisation levy.

The developing countries are of the view that any commitment to not enact future measures should be in the nature of political commitments only.

Commenting on the Pillar One progress report released last month by the Organisation for Economic Co-operation and Development (OECD) Secretariat, the G24 members said: “We should be conscious that any commitment beyond a political commitment will effectively constrain,” according to a report in Business Standard, “future law-making powers of sovereign jurisdictions. Setting such a high legal bar runs the risk of undermining the consensus solution that the current work aims to achieve and will raise constitutional concerns in various jurisdictions.” The business daily cited Akhilesh Ranjan, advisor (tax policy) at PwC, as saying that there is a slim chance the deal would be implemented within the timeline, and it is likely to be postponed by one year. (www.business-standard.com)