{"id":239992,"date":"2023-04-28T10:35:24","date_gmt":"2023-04-28T05:05:24","guid":{"rendered":"https:\/\/blog.forumias.com\/?page_id=239992"},"modified":"2023-04-28T10:36:09","modified_gmt":"2023-04-28T05:06:09","slug":"gafa-tax","status":"publish","type":"page","link":"https:\/\/forumias.com\/blog\/gafa-tax\/","title":{"rendered":"GAFA Tax"},"content":{"rendered":"<p>GAFA tax <span data-contrast=\"auto\">is a proposed digital tax to be levied on big tech companies like Google, Facebook, Amazon and Microsoft. France has\u00a0 introduced GAFA tax at 3% on revenues from digital activities.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:256}\">\u00a0<\/span><\/p>\n<p>OECD is overseeing a deal to negotiate global digital tax by the year 2024 which will be implemented by 2024.<\/p>\n<p><b><span data-contrast=\"auto\">GAFA Tax: Rationale<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:256}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"28\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">\u00a0The tax regulations now in place, which were designed with brick-and-mortar company models in mind, are ineffective at regulating internet services.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559685&quot;:360,&quot;335559740&quot;:256}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"28\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"auto\">\u00a0The way that users contribute to the creation of value, which results in income, distinguishes technology companies from traditional enterprises.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559685&quot;:360,&quot;335559740&quot;:256}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"28\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"auto\">The intricate corporate arrangements by businesses generating significant revenues enable them to reduce their tax obligations by moving profits to low-tax countries. (Problem with Base Erosion and Profit-Sharing)<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559685&quot;:360,&quot;335559740&quot;:256}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><strong>GAFA Tax: Implementation challenges<\/strong><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"29\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"5\" data-aria-level=\"1\"><span data-contrast=\"auto\">The US withdrew from the talks because it thinks that the digital services tax unjustly singles out American businesses.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559685&quot;:360,&quot;335559740&quot;:256,&quot;469777462&quot;:[720,360],&quot;469777927&quot;:[0,0],&quot;469777928&quot;:[0,8]}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"29\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"6\" data-aria-level=\"1\"><span data-contrast=\"auto\">The fact that the value of user contributions is evaluated subjectively in the originating nation is a major obstacle. This may lead to conflicts that could weaken the effectiveness of double taxation agreements.<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"29\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"7\" data-aria-level=\"1\">Lack of consensus on quantifying user contribution\u202fand\u202fdifferences in the interests of developed (residence) and developing (source) countries\u202fhave furthered the delay in devising the global tax system for digital giants.<\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">Digital tax in India<\/span><\/b><b><span data-contrast=\"auto\">:\u00a0<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:256}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">India has the second-largest online users in the world,\u202fwith over 690 million internet users, as of 2023. Hence, from the viewpoint of its tax revenue base, digital businesses could not be overlooked.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:256}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"30\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:360,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"8\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">The \u201cEqualization Levy\u201d: <\/span><\/b><span data-contrast=\"auto\">A tax aimed at foreign digital companies has been in place since 2016 and levied a 6% tax payable on gross revenues from online advertising services.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:256}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li data-leveltext=\"o\" data-font=\"Courier New\" data-listid=\"30\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:1080,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Courier New&quot;,&quot;469769242&quot;:[9675],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;o&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"2\"><span data-contrast=\"auto\">In 2020, the equalization levy was further expanded. It applies from online advertising to all\u202fonline commerce activities done in India by businesses that do not have taxable presence in India. The tax of 2% is applied on its revenues.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:256}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"30\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:360,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"9\" data-aria-level=\"1\"><span data-contrast=\"auto\">Introduced for the purposes of corporate income tax, the term<\/span><b><span data-contrast=\"auto\"> &#8220;Significant Economic Presence&#8221; (SEP) <\/span><\/b><span data-contrast=\"auto\">has grown to incorporate the following:<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:256}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li data-leveltext=\"o\" data-font=\"Courier New\" data-listid=\"30\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:1080,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Courier New&quot;,&quot;469769242&quot;:[9675],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;o&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"2\"><span data-contrast=\"auto\">An advertisement that is directed at a client who lives in India or who visits an advertisement using an Indian IP address.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:256}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"o\" data-font=\"Courier New\" data-listid=\"30\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:1080,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Courier New&quot;,&quot;469769242&quot;:[9675],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;o&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"2\"><span data-contrast=\"auto\">The sale of information gathered from a person who resides in India or uses an Indian IP address.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:256}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">The sale of goods or services using information gathered from a person resident in India or using an Indian IP address.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:256}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>GAFA tax is a proposed digital tax to be levied on big tech companies like Google, Facebook, Amazon and Microsoft. France has\u00a0 introduced GAFA tax at 3% on revenues from digital activities.\u00a0 OECD is overseeing a deal to negotiate global digital tax by the year 2024 which will be implemented by 2024. GAFA Tax: Rationale\u00a0&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/gafa-tax\/\">Continue reading <span class=\"screen-reader-text\">GAFA Tax<\/span><\/a><\/p>\n","protected":false},"author":10341,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"class_list":["post-239992","page","type-page","status-publish","hentry","entry"],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages\/239992","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10341"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=239992"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages\/239992\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=239992"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}