India is poised to advocate for the imposition of taxes on cross-border e-commerce transactions and to resist the extension of the moratorium on customs duties beyond 2024, alongside challenging a move by a coalition led by China to introduce an investment facilitation agreement within the framework of the World Trade Organisation (WTO). A high-ranking official made these declarations on Tuesday ahead of the 13th ministerial conference of the WTO, scheduled to convene in Abu Dhabi from February 26-29.
The existing moratorium on customs duties concerning e-commerce has been in effect since 1998, with successive two-year extensions. India seeks to terminate this moratorium to regain the authority to levy taxes on electronic transmissions, particularly as the digitalization of goods such as books and movies has resulted in significant revenue losses due to them being delivered digitally and evading taxation. A study conducted by the United Nations Conference on Trade and Development (UNCTAD) in 2017 estimated annual global losses of $10 billion, with India alone accounting for losses of $0.5 billion. Given the substantial growth in digitization since then, losses in 2024 are presumed to be significantly higher.
Beyond revenue considerations, India aims to safeguard its emerging industries through the taxation of electronic transmissions. The delineation between digital goods and services requires clarification, particularly concerning streaming platforms like Netflix, where downloads for a fee may blur the distinction between services and products. India, alongside countries like South Africa, Argentina, and Indonesia, opposes the moratorium extension.
Furthermore, India intends to reinvigorate the work program on e-commerce within the WTO, addressing various trade-related issues associated with digital commerce. These include privacy protection, fraud prevention, rules of origin, and the involvement of developing countries and small and medium-sized enterprises (SMEs) in e-commerce.
India also opposes the efforts of a China-led coalition of 130 countries to integrate their "Investment Facilitation for Development" agreement into the WTO framework. This pact, initiated in 2017, seeks to enhance transparency and streamline administrative procedures related to investment but may potentially encroach upon countries' sovereignty over investment policies. Notably, the United States, along with India's neighboring countries like Sri Lanka and Pakistan, has abstained from this agreement. India argues that investment matters should not fall within the purview of a trade body like the WTO.
In summary, India is poised to assert its stance on taxation in cross-border e-commerce, advocate for the regulation of electronic transmissions, and resist attempts to integrate investment facilitation agreements into the WTO framework.
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