Tech giants such as Google, Facebook seek to defer Indian digital tax

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Updated 31 March 2020

Tech giants such as Google, Facebook seek to defer Indian digital tax

  • India announced last week that, from Apr. 1, all foreign billings for digital services provided in the country would attract a 2% tax
  • Executives from top technology companies got together on conference calls organized by US-India business lobby groups last week

NEW DELHI, March 31 : Big US tech firms such as Google and Facebook plan to seek deferment of a new Indian digital tax, which has caught them off-guard as businesses battle the fallout from the coronavirus pandemic, three industry sources told Reuters.
India announced last week that, from Apr. 1, all foreign billings for digital services provided in the country would attract a 2% tax. Foreign billings are where companies take payment abroad for a service provided to customers in India.
The tax would also apply to e-commerce transactions on websites such as Amazon.com, as well as advertising revenue earned from companies overseas if it eventually “targets a customer” in India, the government said.
Executives from top technology companies got together on conference calls organized by US-India business lobby groups last week, and decided to seek a deferment of at least six months, said the three people aware of the talks. They asked not to be named as the discussions were private.
Google is particularly concerned that it will not be able to swiftly identify countries where advertising arrangements were in place to target Indian users, increasing technological and compliance requirements, according to one of the sources.
“Everyone is grappling. In the current downturn, the focus is on protecting the business hit due to coronavirus,” said the source who works for a global technology company and described the tax as a “big, big headache.”
Google and Amazon declined to comment, while Facebook did not respond to Reuters queries. India’s finance ministry also did not respond.
India-US tensions
The extent of possible compliance disruptions caused by the tax, a so-called equalization levy, was not immediately clear, nor was how much India could garner from the tax.
Indruj Rai, a partner at law firm Khaitan & Co, said the government’s move appeared aimed at taxing foreign companies which had a significant local client base but were billing them through their offshore, or foreign, units.
“The timing of the introduction of the levy appears to be an attempt to increase revenue collections during the pandemic,” Rai added.
The new tax was inserted in the 2020-21 budget amendments passed last week, giving companies only a few days to prepare. The levy was not part of budget proposals first presented on Feb. 1.
India and the United States remain at loggerheads over a wide array of tariffs. The digital tax has alarmed the US government, which has reviewed it, but Washington is not immediately likely to raise concerns with New Delhi given priorities over the coronavirus, said a fourth source aware of the US government’s thinking.
The US Embassy in New Delhi did not respond to a request for comment.


News Corp. Australia’s push for digitization to lead to job losses

Updated 28 May 2020

News Corp. Australia’s push for digitization to lead to job losses

News Corp. Australia said it would restructure its organization to focus on digital publishing, a move that will also lead to job losses.
Scores of regional and community titles will be published only digitally from June 29 under the reorganization, the Australian arm of the mass media and publishing firm News Corp. said in a statement on Wednesday.
The company did not specify how many jobs could be lost, but Australian media reported up to 1,000 staff could be axed as a result of the restructuring.
It said its print publications had become unsustainable amid the coronavirus pandemic and the loss of revenue to digital platforms that use its content without payment.
“To meet these changing trends, we are reshaping News Corp. Australia to focus on where consumers and businesses are moving and to strengthen our position as Australia’s leading digital news media company,” News Corp. Australasia Executive Chairman Michael Miller said.
News Corp. incurred an impairment charge of $1.1 billion in the third quarter ended March 31, primarily related to a write-down at its struggling Australian pay television unit, Foxtel.