During the G20 Summit in New Delhi, India, efforts were made to increase multinational corporations' tax contributions. Find out more
Most multinational corporations such as Google, Facebook, Meta, Amazon, and Twitter (now known as X) operate their businesses in India, enabling Indian and foreign companies to reach crores of Indians through their online advertising platforms or to sell products through their e-commerce platforms, thereby generating annual revenues in the thousands of crores.
These multinational corporations pass through the GST tax layer (as defined by OIDAR services), paying transaction tax where applicable, but do not pay income tax on their profits because their headquarters are in the United States or other countries. Consequently, the Indian government is losing tax revenue, despite the fact that multinational corporations profit from India Society.
A typical Indian corporation established in India is subject to both the Goods and Services Tax and the Income Tax. This gives multinational corporations an unwarranted advantage over local companies.
To control this blead and level the playing field, the department of finance in India (DoF) and the income tax department imposed a tax on OIDAR services, which are only taxed under GST, resulting in further price increases, affecting Indian consumers and businesses.
In recent years, the Indian government has considered advocating for a "global minimum tax" of 15% regardless of where a company's headquarters are located, plus an additional tax on 25% of "excess profits" for those who fall below a certain global revenue and profit percentage.
Participants in the G20 Summit include both suppliers (beneficiaries or tax gainers) and consumers / markets (those suffering from Online business or tax losers) of Online / Cloud businesses. To concur on the Global Minimum Tax (GMT), it is crucial that various nations engage in dialogue and reach a consensus.
According to multiple sources, India would emphasize the "global minimum tax" and the tax on "excess profits" to level the playing field for Indian companies, which is a welcome move for India.