India and US agrees settlement on 2% equalisation levy 2020

India and US agrees settlement on 2% equalisation levy 2020 India and the United States have reached an agreement to resolve concerns over India's 2 percent equalisation charge on e-commerce companies. On October 8, 2021, India and the United States joined 134 other OECD/G20 Inclusive Framework members (including Austria, France, Italy, Spain, and the United Kingdom) in signing the Statement on a Two-Pillar Solution to Address Tax Challenges Arise from Economic Digitalization. The US AND Austria, France, Italy, Spain, and the United Kingdom struck an agreement on a transitional approach to existing Unilateral Measures while adopting Pillar 1 on October 21, 2021. The agreement was represented in a joint statement made on October 21 by those six countries ("October 21 Joint Statement"). The United States and India have agreed that the conditions of the October 21 Joint Statement will apply to India's 2% equalisation levy on e-commerce services and the United States' trade action in response to the Equalisation Levy. The interim period, however, will last from April 1, 2022, to March 31, 2024, whichever comes first. India and the United States will keep in regular communication to ensure that both parties understand their respective obligations and to work out any remaining differences of opinion via constructive discourse. The agreement is similar to the one agreed on October 21 between the United Kingdom, Austria, France, Italy, and Spain and the United States under the Unilateral Measures Compromise. The 2% equalisation levy will have to be eliminated once the OECD agreement is implemented. This holds true for other countries that have enacted a similar tax. The United States will end the trade tariffs it had announced in retaliation to the tax and will not take any further steps. The Agreement's final clauses must be finalised by February 1, 2022.