The Indian Equalisation Levy: Inelegant But Not Unexpected

The taxation of income from cross border e-commerce is a difficult issue on which there has been little international consensus over the last two decades. This paper argues that the challenge of finding a suitable solution is even more difficult for a developing country like India on account of distributive iniquities in the international tax treaty framework. Although BEPS efforts have made some progress in recognising these iniquities, they stop short of recommending a feasible, internationally acceptable alternative. This has left countries to find their own unilateral measures, such as the Indian equalisation levy. However, such responses are imperfect, short-term solutions that are likely to create more issues than they will resolve. An internationally workable solution may only be possible through a deeper engagement with distributive allocations and the principle of nexus.