WTO extends nil tariffs on digital trade for 6 months

The World Trade Organisation (WTO) yesterday decided to extend the 20-year-old practice of not imposing customs duty on digital trade by six months to June 2020—seen as a setback for India and other developing nations. South Africa and India had argued that the moratorium led to loss of revenue as it gave such transactions immunity from taxation in the WTO.

The moratorium on digital trade, worth an estimated $225 billion a year, has been in place since 1998, but was due to expire this month. The moratorium was last extended at the 2017 Ministerial Conference in Buenos Aires until the next ministerial, originally planned for December 2019.

India’s potential annual loss of revenue by not taxing electronic transmissions is around $500 million, according to a study by the United Nations Conference on Trade and Development (UNCTAD). Of the total $8 billion of potential tax losses projected for 58 developing countries, Mexico, Thailand, Nigeria, India, China and Pakistan face the highest losses, the research paper said.

Amid fears that countries would indiscriminately impose taxes, Singapore, South Korea and the United States have demanded that the temporary moratorium be made permanent, according to global news wires.







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