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Indian Govt. is finalizing a framework to tax Big Tech Giants



New Delhi: The government is looking to set a revenue threshold of Rs 20 crore and a limit of 500,000 users above which non-resident technology companies such as Google, Facebook and Twitter will have to pay direct taxes on profits earned locally, multiple sources in the know of the matter said.

Multinational tech companies have been accused of paying very little taxes locally despite earning significant revenue and profits from offering services such as online advertising to customers in India. Hence a step may be taken by the govt. to increase the revenue by these multinational giants.

These limits are part of the ‘Significant Economic Presence’ (SEP) concept that was introduced in the budget last year. The government is also considering that if the SEP could be made a part of the draft Direct Taxes Code, which seeks to consolidate laws relating to direct taxes. The draft is expected to be submitted to the finance ministry soon.

The CBDT had in a notification in July 2018 asked for suggestions to frame rules related to SEP, but the government has not yet finalised it. A sense of urgency, however, has crept in after finance minister Nirmala Sitharaman urged G20 members last month to fix the issue of taxation of profits made by digital companies.

While India is backing the concept of SEP, the EU has indicated that it could levy a tax of 3% on digital revenues generated in the source country.

Organisations like Google and Facebook have started billing users locally, but they do not report the entire transaction value as part of their India revenue. They only report a part of the transaction as commission, while the rest of the money is remitted to overseas entities as cost. Hence India introduced an equalization levy of 6% on such remittances, one of the highest in the world.


Zoom saw its popularity soaring in the last three months




“We were humbled by the accelerated adoption of the Zoom platform around the globe in Q1. The COVID-19 crisis has driven higher demand for distributed, face-to-face interactions and collaboration using Zoom. Use cases have grown rapidly as people integrated Zoom into their work, learning, and personal lives,” said Eric S. Yuan, Founder and CEO of Zoom.


While Zoom saw its popularity soaring in the last three months, governments and law enforcement agencies also sought clarification from the video meet app over data hoarding and cyber hoarding, along with issues of unauthorised access termed as “zoom-bombing”.

After the Supreme Court in India sought the response of the Central government over a petition seeking a ban on Zoom, the video calling app claimed that it “takes user privacy, security, and trust extremely seriously.”

“Zoom takes user privacy, security and trust extremely seriously. We have been focused on enhancing our commitment to security and privacy under our 90-day plan announced on April 1, and have made significant progress,” the company said in a statement.

“Our primary grants in Q1 were toward organisations making a difference during COVID-19,” said Yuan.

Zoom growth has led to several tech giants ramping up their video conferencing services like Microsoft Teams, Google Meet and Facebook Messenger Rooms, among others.

Zoom recently announced that it will expand its engineering team with up to 500 new headcount based in Phoenix, Arizona and Pittsburgh, Pennsylvania, in the US.

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