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.


Facebook’s Zuckerberg promises a review of content policies after backlash

Updated 06 June 2020

Facebook’s Zuckerberg promises a review of content policies after backlash

  • Trump's message contained the phrase "when the looting starts, the shooting starts"

WASHINGTON: Facebook CEO Mark Zuckerberg on Friday said he would consider changes to the policy that led the company to leave up controversial posts by President Donald Trump during recent demonstrations protesting the death of an unarmed black man while in police custody, a partial concession to critics.
Zuckerberg did not promise specific policy changes in a Facebook post, days after staff members walked off the job, some claiming he kept finding new excuses not to challenge Trump.
"I know many of you think we should have labeled the President's posts in some way last week," Zuckerberg wrote, referring to his decision not to remove Trump's message containing the phrase "when the looting starts, the shooting starts."
"We're going to review our policies allowing discussion and threats of state use of force to see if there are any amendments we should adopt," he wrote. "We're going to review potential options for handling violating or partially-violating content aside from the binary leave-it-up or take-it-down decisions."
Zuckerberg said Facebook would be more transparent about its decision-making on whether to take down posts, review policies on posts that could cause voter suppression and would look to build software to advance racial justice, led by important lieutenants.
At a staff meeting earlier this week, employees questioned Zuckerberg's stance on Trump's post.
Zuckerberg, who holds a controlling stake in Facebook, has maintained that while he found Trump's comments "deeply offensive," they did not violate company policy against incitements to violence.
Facebook's policy is either to take down a post or leave it up, without any other options. Now, Zuckerberg said, other possibilities would be considered.
However, he added, "I worry that this approach has a risk of leading us to editorialize on content we don't like even if it doesn't violate our policies."