India and USA agreed to extend the Transitional Approach on Equalisation Levy 2020 until June 30, 2024.
On October 8, 2021, India, the United States, and 134 other members of the OECD/G20 Inclusive Framework, including Austria, France, Italy, Spain, and the United Kingdom, agreed on the “Statement on a Two-Pillar Solution” to address tax challenges from the digitalization of the economy.
On October 21, 2021, the US and five European countries (Austria, France, Italy, Spain, and the UK) reached a political compromise for the transitional period while Pillar 1 of the agreement was being implemented. This was detailed in the “October 21 Joint Statement.”
On November 24, 2021, India and the US agreed to apply the October 21 Joint Statement terms to their situations, particularly concerning India’s 2% equalisation levy on e-commerce services and US trade actions related to this levy. This agreement, valid from April 1, 2022, until the implementation of Pillar 1 or March 31, 2024, was confirmed in the “November 24 Statements.”
On December 18, 2023, the Inclusive Framework urged finalizing the Pillar 1 multilateral convention text by March 2024, aiming for a signing ceremony by June 2024, indicating progress towards a global digital economy taxation framework.
And on February 15, 2024, the US and the five European nations extended their political compromise from the October 21 Joint Statement until June 30, 2024, formalized in the “Updated October 21 Joint Statement.”
Following these developments, India and the United States have decided to extend the validity of the agreement reflected in November 24 Statements until June 30, 2024. All other terms of the transitional approach remain the same.
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