If the end of Google Tax is a QUID, then what is Quo and which Quid is being given away?
The formal Google Tax equal taxation of diplomatic services companies does not generate much revenue. Indian entities placed on platforms like Google, Meta, and Amazon have a tax rate of 6% on total digital ads, with less production than ₹According to news reports, there are 350 crore rupees so far this year.
It is very qualified to be a consumable piece in your high-risk chess game with stronger opponents. Sacrifice is an integral part of the game, and as long as you give up your carefully selected work, there is a strategic game plan that can give you an advantage.
To be fair, we cannot expect the government to disclose its negotiation strategy, even if there is a key negotiation with the U.S. government to avoid the Trump administration’s statement that it will impose reciprocity tariffs on India and other countries, namely April 2. The public will not know later if taxes previously opposed by the U.S. government.
Basic erosion and profit transfer
India is not the only country to impose Google taxes. Up to 18 countries impose so-called digital service tax on companies that generate revenue from their jurisdictions without having to physically exist within their jurisdiction. Most of these remote service providers are U.S. tech giants that create subsidiaries in low-cost jurisdictions to sell advertising slot machines to companies around the world. These tech giants end up earning income from many economies without paying any taxes in those economies at the value they get from them.
An ideal solution for giant companies that earn income and profits from jurisdictions without paying taxes to their authorities is a global multilateral agreement designed to collect taxes at the central level and distribute them to countries that generate profits, proportional to the profits generated in each jurisdiction.
In fact, in an interdependent, globalized world, it’s not just digital services companies that do. Transfer pricing, tax arbitrage, taking advantage of the generous supply of spacious jurisdictions in the world (in less gentleman’s terms, well-known for tax paradise) and professional service companies Canny Brains such as professional service companies such as PWC, EY, KPMG and Deloitte, make sure to pay the maximum tax anywhere.
It is precisely to solve this problem, which was marked as basic erosion and profit transfer by the Organization for Economic Cooperation and Development, so that in July 2021, the United States finally joined.
World’s minimum tax agreement
It has two pillars. Pillar 2 envisions a minimum tax rate of 15% for corporate income in all jurisdictions. Pillar 1 envisions distributing profits from large global companies to different jurisdictions where the company generates revenue, even if the company does not have an entity in these jurisdictions (permanent agency, in tax jargon). In return, the economy that imposes digital services tax is obliged to eliminate such taxation.
But the process of approving a deal with the world’s lowest tax reached by 130 countries has been extended beyond the deadline for Joe Biden’s administration willing to join the administration. One of the first executive orders issued by President Trump after taking office was to withdraw the United States from the Global Tax Agreement. Without the participation of the United States, tax agreements cannot be implemented.
Google tax is scheduled to die, but Trump has canceled the reason for his dignified death. Now, by threatening to impose huge tariffs on countries that violate the U.S., eliminating digital taxes depends on U.S. bullying.
India has a large number of services exports: in 2023-24, commodity exports were US$437.1 billion, while services exports contributed US$341.1 billion. For service exports, the United States is an important market, not just services directly provided in the United States. India hopes that when offering offers in commodity trade and other secondary matters, discounts for service exports can be withdrawn, some of which are provided by Indian service professionals traveling to the United States to provide services and require a visa.
How this will go remains to be seen. What can be said now is that if substantial concessions can be drawn through ongoing negotiations with the United States, then it will make sense to collect taxes on Google.
