Indian Tax Liability Of Google, Facebook, Twitter, Etc For Online Business And E-Commerce

Indian Tax Liability Of Google, Facebook, Twitter, Etc For Online Business And E-CommerceConflicts of laws have been posing difficulties for long. They have been used to escape legal obligations and liabilities in many cases. Countries around the world have entered into unilateral and bilateral agreements and treaties to minimise the impact of conflict of laws to their local jurisdictions. However, information and communication technology (ICT) has added a very complex and complicated layer to this conflict of laws problem.

Conflict of laws in cyberspace is the technology version of its traditional counterpart. Newer business models like e-commerce, online businesses, online consultancies, online advertisement, etc have bypassed all the traditional safeguards to make the companies and individuals liable for laws of various jurisdictions. The tax heavens have added another significant problem to this scenario.

Many foreign technology companies have been doing online businesses through their parent company established in foreign jurisdictions while having a subsidiary company in India. This way they are trying to bypass the local laws of various jurisdictions, including India. Unfortunately, Indian government is supporting these foreign technology companies in their tax evading and law braking activities.

A crucial question that is making rounds these days is Google liable to pay taxes in India? This is a very crucial case for Indian taxation jurisprudence having multi jurisdiction aspects. Similarly, the Google’s online defamation case is testing the significance and applicability of Indian laws to online businesses breaking Indian laws with impunity. The legal issues of e-commerce in India are not adhered to by national and international e-commerce companies.

Foreign companies like Google, Facebook, Twitter, etc are Internet intermediaries within the meaning of Information Technology Act, 2000 and they are also required to comply with cyber law due diligence requirements (PDF) in India for having strong virtual and physical contacts in India. Even advertisement revenue is also earned by these companies from Indian activities and targeting Indian residents.

We at Perry4Law believe that all Subsidiary/Joint Ventures Companies in India, especially those dealing in Information Technology and Online Environment, must mandatorily establish a server in India. Otherwise, such Companies and their Websites should not be allowed to operate in India. The Ministry of Home Affairs, India and Intelligence Bureau (IB) are already exploring this possibility.

A “Stringent Liability” for Indian Subsidiaries dealing in Information Technology and Online Environment must be established by Laws of India. More stringent online advertisement and e-commerce provisions must be formulated for Indian Subsidiary Companies and their Parent Websites.