CONTEXT

• India has called upon the G-20 countries to urgently fix the issue of taxing profits made by digital economy companies in countries where they do not have significant physical presence.
• Finance Minister Nirmala Sitharaman addressed the two-day meeting of the G-20 Finance Ministers and central bank Governors at Fukuoka in Japan.
• offshore digital companies such as Facebook, Google and Netflix have little presence in India, taxing their profits is not possible.
• This prompted the government to roll out equalization levy as a tax deducted at source on payments made to them by Indian firms with effect from June 2016.
• The aim is to bring offshore companies with significant economic presence in India into the tax net to address the shortcomings in taxing the digital economy.
• However, India opposed attempts by developed countries to formulate an e-commerce policy outside the World Trade Organization framework.
• The meeting of G-20, grouping of developed and developing countries, concluded.