- By Ajeet Kumar
- Tue, 26 Aug 2025 10:37 AM (IST)
- Source:JND
US President Donald Trump on Monday threatened countries that have digital taxes with "subsequent additional tariffs" on their goods if those nations do not remove such legislation. Citing its sources, news agency Reuters said earlier that the Trump administration was considering imposing sanctions on European Union or member state officials responsible for implementing the bloc's landmark Digital Services Act.
What is Digital Tax?
Many countries, particularly in Europe, have levied taxes on the sales revenue of digital service providers, including Alphabet's Google, Meta's Facebook, Apple, and Amazon. The issue has been a longstanding trade irritant for multiple US administrations. "With this TRUTH, I put all Countries with Digital Taxes, Legislation, Rules, or Regulations, on notice that unless these discriminatory actions are removed, I, as President of the United States, will impose substantial additional Tariffs on that Country's Exports to the U.S.A., and institute Export restrictions on our Highly Protected Technology and Chips," Trump said in a social media post.
In the post, Trump claimed that such legislation was "designed to harm, or discriminate against, American Technology" and that it gave a pass to firms from US tech rival China. Trump has also previously threatened to impose tariffs on countries like Canada and France over differences related to the digital services taxes.
Trump in February ordered his trade chief to revive investigations aimed at imposing tariffs on imports from countries that levy digital service taxes on US technology companies.
Does India impose a Digital Tax on the United States?
India had imposed digital taxes on American companies through the Equalization Levy (EL). However, these taxation systems were phased out recently.
According to the Indian Income Tax Department, the Equalisation Levy was introduced by the Finance Act, 2016, on online advertisement services, provision for digital advertising space, or any other facility or service for the purpose of online advertisement only.
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It means when a non-resident provides services in the nature of online advertisement, provision for digital advertising space, any other facility or service for the purpose of online advertisement (prescribed services), a tax in the form of equalisation levy shall be deductible by the recipient of the service on the consideration paid for such service.
Will Trump's digital tax impact India?
The US criticised these taxes as discriminatory, arguing they disproportionately targeted American firms while exempting Indian companies. The US Trade Representative (USTR) noted that 86 of the 119 companies affected globally were American.
The Indian Finance Act, 2020, has extended the scope of this levy to e-commerce supply and services made/provided/facilitated on or after April 1, 2020. However, the provisions related to the equalisation levy are not applicable with effect from April 1, 2025.
Therefore, Trump’s latest warning will not levy on India.
(With inputs from Reuters)