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17 Jul, 2023 09:49

India to push for hike of windfall tax on multinationals – Reuters

New Delhi reportedly wants to amend the landmark 2021 corporate taxation deal to secure a higher share of taxes from global firms
India to push for hike of windfall tax on multinationals – Reuters

India may demand an increase to the share of taxes multinational companies will have to pay countries where they operate under the 2021 corporate taxation deal due to come into force next year, Reuters reported on Sunday, citing sources close to the discussions.

New Delhi will reportedly propose the amendment at the G20 finance ministers and central bankers meeting in Gujarat this week.

The landmark 2021 deal was signed between the G20 nations and the countries of the Organization for Economic Cooperation and Development (OECD), and its signatories together now comprise more than 140 countries and jurisdictions representing over 90% of global GDP.

The agreement overhauls rules on how governments tax global companies such as Apple and Google which work in multiple jurisdictions and as such can book profits in low-tax countries. The deal sets a minimum 15% tax on these companies, plus an additional 25% tax on their ‘excess profits’ – annual revenues over $22 billion that exceed 10% of annual growth.

However, according to the Reuters report, India wants significant increases in the tax paid in countries where the companies operate. The report did not specify how big an increase India is seeking.

India has made suggestions to get its due share of taxing rights on excess profits of multinational companies,” one of the sources was cited as saying.

New Delhi also reportedly plans to propose that withholding tax which is collected by companies while making payments to vendors and employees and then remitted to the tax authorities would be de-linked from the excess profit tax principle. Under the current deal, countries offset their share of taxes with the withholding tax they collect.

India has reportedly already made these suggestions to the OECD, and they are set to be discussed at the G20 meeting on Monday and Tuesday.

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