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OECD: Submission on Draft Multilateral Convention Provisions on Digital Services Taxes and other Relevant Similar Measures
OECD: Submission on Draft Multilateral Convention Provisions on Digital Services Taxes and other Relevant Similar Measures

January 23, 2023

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The OECD/G20 Inclusive Framework on Base Erosion and Profit Sharing (BEPS) has been working to develop a consensus-based solution to address tax challenges arising out of digitalisation of the economy. Amount A of Pillar One has been developed as part of the solution for addressing the tax challenges arising from the digitalisation of the economy. It introduces a new taxing right over a portion of the profit of large and highly profitable enterprises for jurisdictions in which goods or services are supplied or consumers are located.

The OECD released this consultation paper which contains draft Multilateral Convention (MLC) provisions implementing the commitments with respect to Digital Services Taxes (DSTs) and other relevant similar measures. Based on inputs from Industry, NASSCOM made a detailed submission to the OECD and Ministry of Finance (MoF).

As part of our submission, we have highlighted certain countries have introduced measures to bring Multi-National Enterprises (MNE) group under tax net in a market jurisdiction where they have in-country user base, revenue, data usage/ software downloads, etc. exceeding the prescribed threshold. For e.g., virtual permanent establishment rule or any similar rules under which tax is levied in market/customer jurisdiction. In such cases, the problem of double taxation identified with regards to DST and other relevant similar measure would persist with existence of such digital presence-based nexus rules. Hence, we have requested that such digital presence-based nexus rules should be included in the definition of ‘Digital Services Tax or relevant similar measure’ for removal of existing measures.

Copy of our submission to OECD and MoF is attached for your reference. For more information, reach out to tejasvi@nasscom.in


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20230120_NASSCOM_Response_OECD_ConsultationPaper.pdf

Tejasvi

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