Byte on while staying informed about the latest tax updates.
The Apple SE might just get cheaper. The tech heavyweight is planning to start manufacturing in India. The Information reported that the components of the smartphone will be shipped to Apple’s Taiwanese contract manufacturer in India, Wiston.
This might save them up to 20% on tax and customs.
This Week’s Dose-
- Here We Go Again- Trade War Lurking
- UK in Dire Straits? Debt Larger than its GDP
Digital Tax Crackdown- Trade War Lurking
Digital Tax Crackdown
“We want to have a taxation system of the 21st Century for the business model of the 21st Century,” France’s Minister of Finance, Bruno Le Maire, perfectly summarises why there is a trade-war on the horizons of the new world. The seeds of taxing Digital Giants like Facebook, Amazon, Google, etc. have been sown over the past few years.
For the impending transatlantic trade war takes us to the Summer of 2019. France had announced legislation for taxing big tech firms at 3% of the revenue, to which the US retaliated with threats of increasing taxes on French goods.
This issue was then taken to OECD (Organisation for Economic Co-operation and Development) so that a consensus could be reached among the member countries without a trade war. But, Covid-19 coupled with unemployment and already down-trodden economies have made that difficult to happen.
The major focus of the fury is on the United States as it just backed down from having negotiations about the solution with the member countries of OECD.
Why the havoc?
All these years, since the dawn of globalization, the companies have paid taxes where they have a physical presence. This provided a legal basis for countries to charge taxes. And now, when digital giants are being asked to pay taxes on virtual services like advertising, there is definitely going to be an uproar.
From a nations’ point of view, it has become difficult to track who is doing business with its citizens. Hence, countries have taken matters into their own hands to get the slice of the advertising revenue pie. On the other hand, tech giants have their own woes: “If one country asks you to track advertising reach, it’s annoying but when a dozen countries ask you to do it, it becomes a compliance issue.”
Who is already squeezing the benefits?
India had already come up with the “Equalisation Levy” back in 2016, taxing the advertising revenues. With effect from April 1, 2020, it charged an additional levy of 2% on ‘revenues on all e-commerce transactions.’ Joining the bandwagon are countries like Canada, Japan, Norway, Russia, Saudi Arabia, UK and many more. Twining into a grapevine from there, If one country is thinking about benefiting from it, why would it stop the others.
The looming trade-war lies in the fact that if negotiations do not take place, the alternative to that isn’t status quo, but chaos where every country will act in its self-interest.
UK in Dire Straits? Debt Larger than its GDP
The UK borrowed a record sum of 55.2 billion pounds this May. The figure shot up to 87 billion pounds for the first two months of the financial year i.e. April and May. The UK’s debt mountain now stands at 1.95 trillion pounds which is greater than the size of the whole economy. This is equivalent to 100.9% of GDP. The UK is looking at the greatest public sector deficit since World War-II.
Why the deficit? The massive gap between government spending and tax collection might be the reason behind this. COVID-19 relief measures have been on the rise. The nation has spent billions to create jobs and lays bare the cost of the finances. “The emergency support has placed a ‘colossal burden’ on public finances”, said Samuel Tombs at Pantheon Economics.
A number of tough choices have to be made, like, is this a price worth paying to prevent a bigger cost to the economy?
What’s Happening- Tax Updates
As a #COVID19 relief, @IncomeTaxIndia extends the Income Tax & TDS due dates for the second time.— Quicko (@HowToQuicko) June 25, 2020
You now have 1 more month to make tax-saving investments, file a belated/revised ITR, TDS/TCS statements & get your Form 16.
Check out all the changes https://t.co/Freb2Lfcd6
As a Covid-19 relief, @IncomeTaxIndia extends the Income Tax & TDS due dates for the second time. You now have 1 more month to make tax-saving investments, file a belated/revised ITR, TDS/TCS statements & get your Form 16. Check out all the changes. Read more over here.
How many Indians made it above 500 crore club- Crazy Tax Story
Nearly 5.6 million in India earn over INR 10 lakh annually. Out of these fewer than 100,000 earn over INR 1 crore. The numbers keep getting wee as one climbs up the ladder. Only 77 make it over INR 100 crore. And a mere 3 people made it above INR 500 crore (USD 70 million) in the year.
Surprisingly, India’s richest man, Mukesh Ambani, is definitely not in the top brand. The managing director, chairman and the largest shareholder of the Reliance Industries (RIL) has capped his annual salary at INR 15 crore for 12 times in a row now. Virat Kohli, the highest paid Indian sportsman earned approx INR 189 crore (USD 25 million) and bollywood actor Akshay Kumar came close to breaching the threshold at INR 462 crore (USD 65 million).
Now the mystery remains- who are the people earning over INR 500 crore?
Byte of the Day
“A tax is a fine for doing well. A fine is a tax for doing wrong.”-Mark Twain