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Oct 11, 2019
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OECD proposal: Global tech firms’ tax liability here may rise
The basic framework to tax digital companies as released by Organisation for Economic Co-operation and Development (OECD) could potentially bring companies like Google, Facebook and Netflix among others under larger tax liabilities than what they currently pay in jurisdictions like India. The proposal would be finalised by end of next year with formulae to calculate allocation of profits and corresponding taxing rights to countries and jurisdictions. An internal document of the tax department had earlier proposed a line similar to the new ‘unified approach’ laid out in OECD’s consultation documents by seeking to establish nexus rule for companies which would not be defined by mere physical presence. Instead, the department said, the tax liability for such digital firms in India would arise once they breach a certain revenue threshold from consumers here. This would be applicable to highly digitalised businesses and consumer facing businesses, both business to business (B2B) and business to consumer (B2C).
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