WASHINGTON – The Office of the United States Trade Representative welcomes today’s announcements by the Ministry of Finance of the Government of India and by the Department of the Treasury that the United States has reached a political agreement with India regarding the treatment of Digital Services Taxes (DSTs) during the interim period prior to full implementation of Pillar 1 of the Organization for Economic Co-operation and Development (OECD) agreement.
Under this agreement, and consistent with and applying the same terms as the earlier agreements with Austria, France, Italy, Spain, the United Kingdom, and Turkey, in defined circumstances the liability from India’s equalisation levy on e-commerce supply of services that U.S. companies accrue in India during the interim period will be creditable against future taxes accrued under Pillar 1 of the OECD agreement. The period during which the credit accrues will, however, be from April 1, 2022 until either the implementation of Pillar 1 or March 31, 2024 (whichever is earlier).
In return, the United States will terminate the currently-suspended additional duties on goods of India that had been adopted in the DST Section 301 investigation. USTR is proceeding with the formal steps required to terminate this Section 301 trade action, and in coordination with Treasury, will monitor implementation of the agreement going forward. Treasury’s statement on the agreement with India may be found here.
The United States has now reached agreement regarding the treatment of DSTs during the transitional period prior to entry into the force of Pillar One of the OECD’s historic agreement on global taxation in all seven of the DST Section 301 investigations.