India announces its first ever digital tax

The Indian government has presented the Union Budget, which included the announcement of India’s digital tax, called the equalisation levy (EQL). The EQL was proposed in March by a government-appointed panel.The EQL taxes payments to foreign firms for online advertisements, provided that these firms don’t have a permanent establishment in India. The reasoning behind the tax is that it will ‘neutralise the advantage foreign e-commerce firms, having no permanent presence in India, enjoy over India-based local competitors,’ thereby mainly targeting digital multinationals, such as Google and Facebook. The EQL will come into effect from 1 June.