India will not sign the global corporate tax deal focused on highly profitable multinational firms unless its concerns about dispute resolution and the treatment of withholding tax are addressed, a finance ministry official said on Thursday.
Pillar 1 Arrangement: This arrangement is part of the 2021 global two-part tax deal, designed to replace unilateral digital services taxes (DSTs). It introduces a new mechanism for sharing taxing rights on multinational companies, such as Alphabet’s Google, Amazon, and Apple.
Indian Proposal: As a compromise, India has proposed to eliminate a 2% equalization duty on digital service providers. This move would result in a loss of approximately 25 billion rupees ($300 million) annually for the Indian government.
Pillar 2 Implementation: Many countries have started implementing Pillar 2, which establishes a global minimum tax rate of 15% on multinationals. However, it has not yet been ratified by the United States.
India’s Actions on Pillar 2: India has formed a panel to develop rules for implementing Pillar 2.
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