Taxing the Digital Economy: A Comparative Analysis of International and Indian Taxation Practices

Taxing the Digital Economy: An In-Depth Look at International and Indian Approaches

Introduction

The digitization of the economy has presented similar challenges to various nations or contracting states, but the responses have not been consistent. Some nations have taken unilateral measures, while others have implemented measures collectively. The USA and other industrialized nations have primarily recommended ad hoc modifications to the existing tax system or international tax norms to address the challenges posed by the digital economy.[1] The conflicting proposal or recommendation by developing nations involves a departure from the old traditional tax treaty principle of “permanent establishment” in relation to digital economics as well as other conventional cross-border business activities.[2] Generally, multinational business entities that generate income or profits are prima facie covered for taxation in the jurisdiction where the corporate entities are located.

Also Read: Types of Taxes and Distinction between Direct and Indirect Tax

The current system of international income tax rules contains loopholes in tax treaties that enterprises exploit while conducting economic activities using ICT, creating challenges in avoiding taxation entirely.[3] There is a broad consensus among international tax experts regarding the need to expand the definition of Permanent Establishment (PE), as the current standard based on physical presence does not align with the realities of cross-border and e-commerce transactions. Many domestic tax authorities oppose the theory that suggests web hosting should be considered a PE.[4] The issue with accepting this approach is that enterprises often use secondary services such as advertising, storage, and other auxiliary activities, which does not benefit developing nations.

OECD RESPONSE/DEVELOPED COUNTRIES

The nation’s response to the challenges of the digital economy, mainly through the OECD, is more attractive and frequent compared to other leading economic groups of countries. The OECD’s response can be traced from Base Erosion and Profit Shifting (BEPS) in 2013 to the fixed corporate tax in the digital era in respect of international taxation, spanning from 2013 to 2021.[5] BEPS occurs when enterprises “exploit gaps and mismatches in tax rules to artificially shift profits to locations with no/low tax rates and little or no economic activity.”

BASE EROSION AND PROFIT SHIFTING

        BEPS is one of the significant strategies employed by corporate enterprises to avoid taxation in the context of digital economics while maintaining fair and equitable modes of taxation.[6] he OECD report suggests that various states lose between 100 to 250 million annually due to the tactics of multinational enterprises. For example, larger enterprises have established their headquarters in European countries with very low corporate taxes, such as Ireland.[7] For many years, Google made contracts for online advertisements in other countries from its European headquarters in Ireland. Their actions were legal and allowed the profits from the business activity of online advertisements to be taxed in the headquarters country (Ireland), rather than in the countries in which the online advertisements took place.[8]

           The challenges are also recognized by the OECD/G20 countries, which acknowledge the need for required actions to adapt corporate tax rules to the digital economy through the BEPS Project.[9] In a meeting, a provisional report was submitted on the implications of taxing the digital economy to the G20 Finance Ministers in 2018. However, the interim report was not accepted by most of the world. In 2017, such challenges were identified in the Communication of the Commission on ‘A Fair and Efficient Tax System in the European Union for the Digital Single Market.’ The commission identified various challenges that arise in the digital economy, and the European Council made proposals for the need of an effective and fair taxation system suitable for the digital era and looked forward to addressing these challenges.”

MODIFYING THE RULES OF EXEMPTION FROM PE

The exiting treaties provided the exemption one of them is contained in Paragraph 4 of Article 5 of the OECD Model Convention relating to the preparatory and auxiliary, Action Plan 1 report suggested the said exemption should not available in connection to the PE.[10] The BEPS is based on the allocation of profits for multi-jurisdictional businesses connected through the digital economy, and the very nation has demanded the taxing profits based on sourcing principles. The proposal is the right way to first distinguish between core and non-core business activities. [11]

The proposal also suggests that the definition of PE modify ‘exclude the human intervention.[12] Further, the report suggested that Modify PE’s definition for excluding the server from determining the PE. Further, while applying the exception of preparatory and auxiliary activities from the concept of PE, the functions that are attributable to software should be excluded.[13] 

NEW NEXUS BASED ON SIGNIFICANT DIGITAL PRESENCE

            The Action Plan 1 report suggested alternative nexus in which economic activities are done fully digitally. The suggestion is, that an enterprise engaged in certain ‘fully digital activity’ without any physical presence would be considered PR if it maintained a ‘significant digital presence in another state. The said proposal also has suggested various tests to determine the creation of digital PE and the following test are:-

1. The number of contracts for goods or services are signed without any physical presence between enterprise and customer that is resident for tax purposes;
2. The consumption jurisdiction of  digital goods or services;
3. The payment is made by the customer in the state to the enterprise in connection with contractual obligations arising from the core digital goods or services activities by enterprises. 
4. An existing branch of the enterprise provided the other secondary activities in the county such as marketing, consulting, etc.

The suggestion has a major drawback of ‘fully dematerialized digital activities’ because still not possible to run the business activities without any physical presence. The suggestion limited the scope of taxing the digital economy.       

TWO-PILLAR SOLUTION FOR DIGITAL THE ECONOMY[14]

In 2021 under the head of the OECD, 137 countries adhere to the statement known as the TWO-Pillar solution for challenges arising from the digital economy. Pillar One can be call as Reallocation of profits in which provides a new nexus rule and profit allocation rules for enterprises for the distribution of revenue among the countries according to their share as per the MNC’s operation. Pillar Two also known as Global Minimum Tax in which set a system to ensure MNCs have to pay a 15% minimum level of tax without their headquartered or the jurisdiction they operate economic activities from 2023.

The solution set a certain threshold that comes under the preview of Pillar one and two. Pillar two excludes the few economic activities from the UTPR for MNCs for 5 years, Government entities, International Organizations, etc. The statement proposed the implementation plan for the member within the context of their legislative system. Furthermore, the plan restricts the new digital service tax or any other mode which taxes the digital economy till 2023 and also proposed the removal of existing DST or other related taxes, but no one has removed them yet.

Unfortunately, this plan will only favor or benefited G-7 countries because the thresholds and requirements are mentioned in both Pillar. Low and Middle-Income countries do not get equitable solutions[15] for reallocating global taxing rights. G-7 counties have celebrated for end of conflict for corporate taxation.[16] Other hand countries Kenya, Nigeria, Pakistan, Sri Lanka refused to sign it while refereeing the concern about the inequities in the proposed system for the developing nations.

Criticism of the plan largely on deals that favor high-income countries, through the additional tax larger revenue share will go to them, LMICs even get lower than the current rate. The Global Minimum tax provision is also against the LMICs because the threshold is not suitable or very high.  The LMICs counties also put an allegation of lack of transparency in negotiations to assess or address the real potential revenue impacts of the deal.[17]

EUROPEAN UNION COUNCIL RESPONSES

The European Union the proposal for a council directive laying down rules relating to the corporate taxation of a significant digital presence

            The following proposal aims the resolving issues raised by the digital economy by setting effective solutions for their member states for the corporate tax systems. In a proposal of a common system for taxing digital activities in the EU, with the aim of properly assessing the digital economy namely:-[18]

1. Significant digital presence:- The proposal lays down rules for establishing a nexus between the digital business operating in the borderless in case of non-physical commercial presence with the taxation. In the significant digital presence, indicators are required in order to establish and protect Member States’ taxing rights with respect to new digitalized business models.

Article 4 of the Said Council proposal deal with the significant digital presence for establishing the taxable nexus in the jurisdiction, which is an addition to the definition of PE. In the proposal, there is a need to establish a tax nexus of digital activities with the members of the EU and the financial transfer for digital services. The said rule also provided some indicators for the digital economy which can be taxes such aa s larger user base, and revenue generated through these businesses.[19]

As per section 6.3 indicated in the Impact Assessment, it is critical that each threshold be set high enough to securely exclude tiny cases where income attributable to a digital presence would not even exceed the expense of tax compliance for a permanent business, so ensuring that the rules are followed.

While using these three alternate thresholds, the measure’s proportionality is maintained. T

2. Attributing Profits:- Another set of proposals is attributing profits to taxing the digital business. These principles should help in the creation of digital economic models which highly rely on intangible assists.

Economically important functions relevant to the attribution of economic ownership of assets and risks to the significant digital presence include operations done by the firm through a digital interface connected to data and users. Even if the digital presence is not linked to people functions in the same Member State, profit attribution should take into account the development, enhancement, maintenance, protection, and exploitation of intangible assets in the performance of economically significant activities by the digital presence.[20]

This proposal is considered a directive, once it is implemented in the Member States by the national legislation, will apply to digital transactions with respect to cross-border. European is also a member of the various Double taxation treaties, among the EU members and others too, but there are no changes in the thus treaties but EU countries have taken unilateral action to tax cross-border digital economic activities such France, Spain, etc. 

The unilateral initiative has been taken by the developed or industrial nations to tax cross-border/ domestic digital economic activities. Some states have also taken steps to modify or amend the permanent establishment definition. The following table identifies the measures and description of the initiative:-[21]

S.No	Country	Measures	Description
1	Italy	Digital Service Tax	Taxable Person- business activities carry by individually or at a group level, jointly meet
		Modification in the Definition PE	Introduced by the web tax in 2019 the concept of significant and continuous economic presence. Amount arising in Italy equal to or exceeding €5,500,000 DST applies only to the following services- Advertisement, users to interact for goods and services, data collection and transmission.  Tax rate is equal to 3%
2	Hungary	Advertisement Tax	AT is imposed on advertisements published in Media services including digital advertisement. ● The advertisement tax rate is 7.5%
3.	Spain	Digital Service Tax	● Digital Service Tax be levied on specific digital services, such as E-commerce, Online Advertisement, etc.. ● Rate: 3 percent ● Worldwide revenue exceeding Euro 750 million and in Spain exceeding Euro 3 million.
4.	Israel	Amendment of the definition of PE	Definition of PE to include economic activities Conducted through the internet.
5.	France	Digital Service Tax	DST is imposed on companies that sell digital goods or services through third parties, traffic in user data, or sell digital advertising.Rate: 3 percentWorldwide revenue exceeding Euro 750 million and in France exceeding Euro 25 million.
6.	UK	DST	Tax imposed on specific digital business economy DST Rate is 2%DST is applicable digital platform such as  search engines, social media platforms and online e-commerce

The OECD and European countries’ economies now largely relied on digital or ICT. The EU countries adopted various unilateral approaches to taxing the digital economy. Austria, France, Hungary other EU countries and the United Kingdom have implemented a Digital Service Tax. Other low Belgium, the Czech Republic, and Slovakia have published proposals to enact a DST.  Furthermore, starting in 2023, the European Union (EU) plans to impose its own digital charge. Simultaneously, the United Nations (UN) has introduced separate rules for income from “automated digital services” under the head of UN Model Tax Convention (see Article 12B), which will apply to treaty countries that agree to it.[22]

UN MODEL TAX CONVENTION ARTICLE 12B – INCOME FROM AUTOMATED DIGITAL SERVICES

In 2021 Article 12B, was introduced by the UN Tax Committee in UN Model Tax Convention (MTC) and its commentary. Article 12B allows a country such as India to tax payments to offshore digital service providers. While it is promoted as meeting the needs of poor countries, its limited scope, reliance on unworkable bilateral talks, and departure from a multilateral approach raise fundamental issues about its feasibility and even acceptable implementation. The said provision provided Income derived from automated digital services and paid to a resident of another Contracting State may be taxed in that other State.[23]

The scope of Article 12 B is very narrow, it covers a very smaller tax base. Said 2021 proposal only targets services that are delivered through the Internet with little human interaction and payment mode from India. As a result, countries are more likely to embrace a broad-based solution that allows taxation of income from non-digital operations in addition to income derived from multisided models. Such an approach is also likely to lay the groundwork for a long-term tax policy that does not distort corporate operations due to skewed tax incentives. The ambit of Article 12B is very narrow compared to EL and other effort taken by India for taxing cross-border digital economic activities, which I will deal with in the India Response.[24] 

Art. 12B of Paragraph 2 of said treaties dealt with the Gross withholding approach read as “[…] income from automated digital services arising in a Contracting State may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the income is a resident of the other Contracting State, the tax so charged shall not exceed ____ percent (the percentage is to be established through bilateral negotiations) of the gross amount of the income from automated digital services.”

The withholding taxes provided a simple and effective method for taxing profit allocation of no-residents. The proposal helps develop counties for imposing a tax on income from services derived by non-residents.[25] The committee also provides a method for enterprises providing services in another state they would not be required to compute their net profit unless they themselves opt for net income basis taxation.[26]

Online Advertising Digital Services has become one of the major B2B activities on the internet. The scope of Art. 12B must be compared to the OECD Pillar 1 proposal talk about both ADS and the Consumer-Facing Businesses but the UN Art. 12B only deals with ADS.[27] The researcher identify about taxation on a gross basis is problematic and made a reference to the Covid-19, the ADS taxation is not different from other schemes such as royalties and FTS.[28] The cost burden not taken by the enterprises always transfers to the consumer. For example, in France’s DSTs, the big digital enterprises like amazon announced in the cost will pass to the seller[29], and another example Indian, EL enterprises like Appel have passed on the cost to the Indian consumer.[30]

INDIA RESPONSE

In the last two decades, India’s economic growth has been very raptly, and the level of global interaction has also been very significant. A large number of people started using the smartphone and the number of users of the internet also increased in the last decade. These changes make a very significant impact on digital economic activities but also create challenges to tax authorities to determine the taxing jurisdiction in cyberspace.

The digital economy not only creates challenges for domestic tax laws but also challenges for international tax regimes. All the model tax treaties provide a framework for Double Taxation Avoidance Agreements (DTAA), which are tax treaties signed between two or more countries to determine whether taxpayers avoid paying double taxes on the same income. This will identify India’s efforts in the context of both unilateral measures through domestic law and at the international level through international organizations.

Propelled by the OECD / G-20 BEPS Report on Action Plan 1 and the recommendations of the Expert Committee constituted on Taxation of E-Commerce, the Indian government introduced various measures to the proliferation of the digital economy and the protect the revenue, .[31] The researcher will try to analyze these acts of the government and whether the model tax treaty and DTAAs are allowed for such acts or not.

EQUALIZATION LEVY

The Akhilesh Ranjan Committee’s recommendation was accepted in 2016, and a tax known as the Equalisation Levy was imposed on e-commerce transactions under the Finance Act, 2016. The rate of the Equalisation Levy was set at 6 percent for specified services, such as online transactions.

The equalization levy is not a permanent solution but rather an interim measure to address the challenges posed by the digital economy. Global negotiations play a crucial role in shaping any tax law, but the equalization levy on e-commerce is imposed unilaterally without prior negotiation. Considering that the equalization levy is imposed on the consideration received by non-residents and is not applied to transaction income, it does not fall under the purview of income tax. Nevertheless, the authority to levy this tax is granted to the Central Board of Direct Taxes (CBDT).

Finance Act, 2020

With the growth of ICT, e-commerce entered every sector of economic activity, goods, and services including physical and digital goods. These developments have created new tax challenges, mainly related to direct taxation. India had tried to minimize tax evasion through the nexus between the payment and taxable jurisdiction. The government had increased the scope of taxation on e-commerce transactions through the Section 165A of the Finance Act, 2020, relating to the taxation of e-commerce transactions as are under:

1. If a person in India;

2. If a non-resident in the specified circumstances; or

3. If to a person who buys such goods or services or both using an IP address located in India, with effect from 1st April 2020.

The Equalization levy 2.0 of 2% is applicable on the consideration for e-commerce supply of goods or services. The ambit of the Finance Act, 2020 also increased by including the e-commerce operator and define as a non-resident, who operates, manages, and owns a  digital platform for transaction of goods or services.

Exceptions

Section 90 of the ITA empowers the Centre Government, to make treaties with other countries for the purpose of avoiding double taxation. Thus, the provision of the take the certain procedure of the ITA and provide the benefit to the taxpayer under the tax treaties, treaties having the overriding effect on the domestic legislation. The nature of the Finance Act 2020 above explain, the provision also provided certain Exception of section 165A[32] is as follows[33]:-

• If e-commerce operator making or providing or facilitating the supply of goods or services has a permanent establishment in India and such e-commerce supply or services is effectively connected with such permanent establishment;
• If the equalization levy is leviable under section 165; or
• If the Sales, turnover, or gross receipts, as the case may be, of the e-commerce operator from the e-commerce supply or services made or provided or facilitated as referred to in sub-section (1) is less than 2 crore rupees during the previous year.

PRACTICAL CHALLENGES

The Finance Act 2020 is one of the controversial legislative amendments for taxing the digital economy in India under the Income Tax Act. The ill-equipped and outdated tax treaties are not able to determine the taxing rights of states, countries like India, the exponential growth of ICT opens the doors to a digital economy and enterprise generate revenue by both residents and non-residents but exiting Income Tax norms face the challenge for this digital transaction. The EL 2.0 not only covers the domestic enterprise but also the non-resident of e-commerce operator but norms do not have to provide clarity for implementation and the following questions arise:-

1. To whom equalization levy 2.0 will apply and who will be the e-commerce operator?

2. What constitutes a digital mode? Is email or telephone covered or not?

3. Applicability of EL in cases where services are ordered online but payment made offline? (e.g. hotel, Cab, etc. )

4. Will equalization levy 2.0 be against the international tax jurisdiction? 

The Indian EL law does not provide a sufficient rule for applicability and procedural aspects. The criticism of unilateral measures on the ground of double taxation.  The ill-equipped and outdated tax treaties and unilateral actions increase the violation of international double taxation because the state of residence is not obligated to provide any relief under the tax treaty because the equalization charge is not covered by the treaties.[34] Even the reports accepted the limitation of the equalization levy does not cover the tax treaties but is taxable under domestic law. However, the report also presents the view that nothing prevents the sovereign from making relief to resident taxpayers to avoid double taxation.[35]

SIGNIFICANT ECONOMIC PRESENCE

In 2018, the concept of Significant Economic Presence (‘SEP’) was introduced in the definition of the term ‘business connection’ under the Income-tax Act, 1961 (‘the Act’) to tax income based on the economic presence and not merely physical presence. The intention to introduce SEP provisions in the ITA was to allow India to negotiate for the new nexus regulation to be included in the DTAA in the form of SEP. That cross-border corporate profits will continue to be taxed under existing tax treaty rules unless equal or similar revisions to the notion of Permanent Establishment (‘PE’) are made in the DTAAs.

The Explanation 2A to Section 9(1)(i) provided flowing three essential conditions which constitute SEP:-

–		There must be an agreement entered in India for  economic transactions; or
–		The place of business or residence must be in India of a Non-Resident; or
–		The Non-resident renders services in India.

The Finance Act 2020 also become very important to see the drawback of the model tax law convention, issues try to resolve through the domestic law. New section 194-O of the Act was introduced on e-commerce payments to specified Indian residents. India prescribed the revenue threshold of INR 20 million (USD 2,70,000) and a user threshold of 300,000 for the application of the SEP rules from Financial Year 2021-22. The e-commerce operator is required to withhold tax at the rate of 1% of the gross amount of sales/provision of services facilitated by it through its digital platform. Still, there is no clarity on the present rule of whether Article 7 of the DTAAs has any conflict or not.  

In Verizon Communications Singapore (P.) Ltd. v. ITO (International Taxation the Madras High Court was held that

“in any event, in a digital age, the physical presence of a business enterprise is not required to do business; the presence of the equipment of the assessee, its rights and the responsibilities of the assessee, vis-a-vis the customer and the customers’ responsibilities clearly show the extent of the digital presence of the assessee which operates through its equipment placed in the customer’s premises through which the customer has access to data on the speed and delivery of the data and voice sent from one end to the other.”[36]

U.S.–FRANCE TAX TREATY

            The unilateral approach to tackling the taxation issue in the digital economy raises concerns about the violation of Double Taxation Avoidance Agreements (DTAAs). The French Digital Tax imposes a 3% tax on the profits from online sales for third-party retailers from e-commerce platforms such as Flipkart and Amazon, as well as on digital advertising and the sale of private data.[37] This raises the question of whether the French digital tax violates the U.S. – French Treaty for the Prevention of Double Taxation and Fiscal Evasion with Respect to Taxes on Income and Capital.[38] DTAAs are periodically updated to accommodate changes in international business practices and tax treaties, reflecting alterations in domestic taxation laws and policies and addressing new challenges in cross-border transactions that may arise between treaty revisions. According to the treaty, a state is allowed to levy a tax on business profits only when the business has a ‘permanent establishment’ in the contracting state, as per Article 5.”

            The Digital Service Tax does not fall under the scope of Article 1, the non-discrimination clause of the treaty, so it does not violate Article 22. Using Google as an example in the context of the French Digital Tax, Ireland can claim ‘nationality discrimination.’[39] many companies have challenged this rule in domestic court.

            Under the Trump administration 2019, ordered USTR investigation under Section 301 of the Trade Act of 1974 of the Digital Services Tax (DST) of the Government of France. The US authority said this type of action violates the DTAA while targeting the USA companies.[40]

            French Digital Services Tax is not only a unilateral response in the European Union, other EU countries adopted similar, even OECD and EU various recommendations for taxing the digital economics and e-commerce.    

Hence, the unilateral response is not a permanent solution to tackle the challenges that arise in existing international tax norms due to the digital economy. The criticism is not constructive; it is motivated by economic self-interest rather than the interest of international trade and the improvement of international tax treaties.

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[1] Taxation and Electronic Commerce OECD Report (1998) available at https://www.oecd.org/tax/consumption/Taxation%20and%20eCommerce%202001.pdf (last seen 15 May 2022)

[2] Indian Tax Authority have recommended various suggestion for domestic and cross-border rules “that the concept of permanent establishment should be abandoned and a serious attempt should be made within OECD or the United Nations to find an alternative to the concept of permanent establishment.”  Union Finance Ministry, REPORT OF THE HIGH POWERED COMMITTEE ON E-COMMERCE AND TAXATION, available at http://www.bmck.com/ecommerce/India%20E-Commerce%2OReport.pdf 

[3] THE OECD’s REPORT ON HARMFUL TAX PRACTICES: THE 2001 REPORT (2001) https://www.oecd.org/tax/harmful/2664450.pdf (last visited May 3, 2022)

[4] PROPOSED CLARIFICATION OF THE COMMENTARY ON ARTICLE 5 OF THE OECD MODEL CONVENTION, Revised Draft 2001 available at http://www/oecd.org/daf/fa/material. (last seen 12 March )

[5] OECD and Taxation of the Digital Economy, Bloomberg Tax, https://pro.bloombergtax.com/brief/oecd-taxation-digital-economy/ (last visited May 10, 2022).

[6] e Eli Hadzhieva, Impact of Digitalisation on International Tax Matters, POL’Y DEP’T FOR ECON., SCI. & QUALITY OF LIFE POLICIES 16 (2019) Available at https://perma.cc/X754-3V6F (last visited May 15, 2022)

[7] Laurel Wamsley, France Approves Tax on Big Tech, and U.S. Threatens to Retaliate, NPR (last visit 16 May 2022)

[8] Romain Dillet, Google to Pay $549 Million Fine and $510 Million in Back Taxes in France,  ECHCRUNCH Available at http://perma.cc/B24J-AVH7 (last visit at 22 April 2022)

[9] OECD report on BEPS Action 1″Addressing the Tax Challenges of the Digital Economy”, 2015

[10] Paragraph 4 or Art. 5 OECD

[11] Chapter 3 Taxation of Digital Economy- Challenges & Response, ITRAF Taxsutra p. 91

[12] OECD, ‘Are Current Treaty Rules for Taxing Business Profits Appropriate for E-Commerce, Final Report available at https://www.oecd.org/ctp/treaties/35869032.pdf (last seen 14 May 2022)

[13] Ibid

[14] Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy – 8 October 2021, 8 (2021).

[15] G7 FINANCE MINISTERS & CENTRAL BANK GOVERNORS COMMUNIQU June 5, 2021

[16] Statement from Secretary of the Treasury Janet L. Yellen on the OECD Inclusive Framework Announcement, U.S. Department of the Treasury, https://home.treasury.gov/news/press-releases/jy0394 (last visited May 29, 2022).

[17] Julie McCarthy, The new global tax deal is bad for development, Brookings (2022), https://www.brookings.edu/blog/future-development/2022/05/16/the-new-global-tax-deal-is-bad-for-development/ (last visited May 29, 2022).

[18] Proposal for a COUNCIL DIRECTIVE laying down rules relating to the corporate taxation of a  ignificant digital presence {SWD(2018) 81 final} – {SWD(2018) 82 final} available at https://perma.cc/9P3K-U45P (last visit 3 may 2022)

[19] Is The EU Ready For New Taxation Rules For The Digital Economy? – Tax Authorities – European Union, https://www.mondaq.com/tax-authorities/882080/is-the-eu-ready-for-new-taxation-rules-for-the-digital-economy (last visited May 16, 2022).

[20] Digital Single Market Strategy: corporate taxation of a significant digital presence | Practical Law, https://uk.practicallaw.thomsonreuters.com/w-013-9108?transitionType=Default&contextData=(sc.Default)&firstPage=true (last visited May 18, 2022).

[21] Taxation of Digital Economy in India, https://taxguru.in/income-tax/taxation-digital-economy.html#_ftn3 (last visited May 16, 2022).

[22] Digital Services Taxes in Europe, Tax Foundation (2021), https://taxfoundation.org/digital-tax-europe-2020/ (last visited May 18, 2022).

[23] UN Model Tax Convention (MTC) Article 12B

[24] MEYYAPPAN NAGAPPAN Digital Taxation: Can the proposed Article 12B of the UN Model work? [2021] 127 taxmann.com 765 (Article)

[25] The UN Proposal on Automated Digital Services: Is It in the Interest of Developing Countries?, Kluwer International Tax Blog (2021), http://kluwertaxblog.com/2021/03/05/the-un-proposal-on-automated-digital-services-is-it-in-the-interest-of-developing-countries/ (last visited May 20, 2022).

[26] UN Committee of Experts on International Cooperation in Tax Matters, Twentieth session, Update on work on taxation issues related to the digitalization of the economy (UN, E/C.18/2020/CRP41, October 2020)

[27] UN, supra n.50, p. 44

[28] UN, supra n. 50, p. 35. FTS stands for Fees for Technical Services laid in Art. 12A UN Mode

[29] Mark Sweney, Amazon to escape UK digital services tax that will hit smaller traders, The Guardian, October 14, 2020, https://www.theguardian.com/technology/2020/oct/14/amazon-to-escape-uk-digital-services-tax-that-will-hit-smaller-traders (last visited May 21, 2022).

[30] Apple passes on 2 per cent equalisation levy to Indian consumers – The Economic Times, https://economictimes.indiatimes.com/industry/cons-products/electronics/apple-passes-on-2-per-cent-equalisation-levy-to-indian-consumers/articleshow/78962608.cms?from=mdr (last visited May 21, 2022).

[31] POOJA DHOKAD Taxation of Digital Economy in India – What to expect from Union Budget 2022? [2022] 134 taxmann.com 284 (Article)

[32] Income Tax Act, Section 165A

[33] Kunal Singhal says, Understanding New Equalisation Levy & TDS on e-Commerce Transactions with Practical Illustrations, TaxGuru (2020), https://taxguru.in/income-tax/equalisation-levy-tds-e-commerce-transactions.html (last visited Jun 1, 2022).

[34][34] TAXATION OF DIGITAL ECONOMY IN INDIA, V I D H I Centre for Legal Policy, Report 2019 available at

[35] Report of the Committee on the Taxation of E-Commerce (n. 166) [130] Page. 86-97

[36] [2013] 39 taxmann.com 70/[2014] 224 Taxman 237 (Mag.)/361 ITD 575,

[37] France to impose digital tax for 2020 despite US retaliation threat, The Economic Times, November 26, 2020, https://economictimes.indiatimes.com/news/international/world-news/france-risks-us-ire-with-vow-to-impose-digital-tax-this-year/articleshow/79410430.cms?from=mdr (last visited May 22, 2022).

[38] U.S-France Treaty 1996

[39] Report submitted  violation of Article 25 (1) of the U.S.-France Treaty related to discrimination

[40] USTR Announces Initiation of Section 301 Investigation into France’s Digital Services Tax, United States Trade Representative, http://ustr.gov/about-us/policy-offices/press-office/press-releases/2019/july/ustr-announces-initiation-section-301 (last visited May 23, 2022).