WTO: India against increasing restrictions on e-commerce duty, foreign companies may be taxed

Foreign companies may now have to pay tax on products like online video games, e-films. In fact, all the developing countries including India, which till now did not have the right to impose import duty, are going to get the right to do so. There is no possibility of extending the ban on imposition of duty on e-commerce in the ongoing WTO Ministerial Conference in Abu Dhabi.

In fact, at present there is no import duty on the movies, video games we download and e-books we buy from the websites of foreign companies. Not only India but no country in the whole world can impose import duty on these products, because there is a ban on imposing such duty under the agreement made under WTO. Many countries including India and South Africa are demanding removal of this ban. On the other hand, America and Europe want to continue the ban on this duty in the future. At present, the limit of this restriction is ending on 31 March 2024.

Two years ago, when the proposal to remove this ban was made, America and Europe had said that they needed some time for this. So that these companies can prepare themselves for tax and at the same time the definition of e-commerce for tax can also be decided. On this basis, the deadline for the tax ban was extended by two more years till March 31, 2024. But in these two years, America and Europe neither decided the definition of e-commerce nor were there any signs of preparation from the e-commerce companies.

Now many member countries including India and South Africa are in no mood to give any concession this time. These countries have made up their mind that now they will not give their consent to extend the deadline. This means that the restriction on imposing duty will no longer be allowed to proceed. According to WTO rules, if even one member country is not ready on a proposal, then that proposal is not included in the declaration. That is, if many countries including India are not ready on the proposal to extend the moratorium, then it will not be included in the declaration. This would simply mean that all countries will get the right to impose duty on e-commerce.

There are a large number of companies in America and Europe which sell products like electronic movies, e-books and earn huge money from these. But it does not pay any tax on this earning in the countries where it is selling the products. According to an estimate, developing countries have suffered a loss of about 10 billion dollars due to this. India alone suffered a loss of 500 million dollars. The special thing is that this estimate is also from seven years ago i.e. 2017. In the last 7 years, this business has spread rapidly and due to this, the loss caused to other countries including India can be estimated.