Untaxed digital imports like video games cost India $4.9 billion in 4 years
India lost nearly $1.5 billion in 2020 and $4.9 billion in 2017-20 by not taxing electronic transmissions, a Geneva-based South Center think tank said in a research paper. .
According to a report in The Economic Times, a A research paper from South Centre, which is an intergovernmental organization of developing countries, said India lost its revenue in imports of items like movies, music and video games. The document, released a week before the World Trade Organization (WTO) ministerial meeting, says tariffs should “regulate conspicuous consumption through imports”.
WTO members, under a temporary moratorium, have agreed that they cannot impose customs duties on electronic transmission since 1998. The moratorium has been periodically extended at WTO ministerial meetings , although some countries want to make the pact permanent while India has opposed this rule.
The document states that India lost $796 million in 2020 and $2.55 billion in 2017-20 in revenue based on applied tariffs (the actual duty collected by nations).
Developing and least developed countries are losing customs revenue, especially during the pandemic, when imports of digitized goods have increased. Developing and least developed countries lost $56 billion in tariff revenue between 2017 and 2020, according to the research paper.
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“Not only are they losing their fiscal space, but they are also losing their regulatory space because they are unable to regulate the growing imports of digitizable products, especially luxury items like movies, music and video games,” said South Center.
India lost more than $500 million in revenue, according to UNCTAD estimates in 2019. “This shows how the loss of revenue is accelerating due to the moratorium,” reported The economic period quoting an official.
The document states, noting that the loss of revenue comes from imports of only 49 products, “In the absence of clarity on the definition of electronic transmissions (ET) and therefore on the scope of the moratorium, the continuation of the WTO moratorium on ET tariffs may result in significant tariff revenue losses for developing and least developed countries in the future”.
The think tank estimated a loss of more than $100 million for China, Indonesia, Pakistan, Russia and South Africa, while India, Mexico, Nigeria and Thailand , it exceeds 1 billion dollars.