A research paper by the United Nations Conference on Trade and Development (UNCTAD) praised India’s stance of ending the moratorium on ecommerce transmissions, ahead of a decision at the WTO on whether the moratorium will be lifted, allowing countries to impose customs duties on electronic transmissions.
The ecommerce moratorium has led to a loss of revenue for developing countries, as it doesn’t allow them to impose taxation on transmissions. This has meant a loss of $500 Mn annually for India and an $8 Bn loss of potential taxes annually for 58 developing countries. Countries like Mexico, Thailand, Nigeria, China, India and Pakistan incur the most losses in this regard, another UNCTAD paper revealed.
India, South Africa United In Opposition To Moratorium
The moratorium on ecommerce transmissions has come into focus during the COVID-19 pandemic, as it saw an “exponential rise in imports of electronic transmissions,” of luxury items like movies, music, video games and printed matter during the Covid-19 crisis but they are unable to tax these “conspicuous imports’”, and that they need to “retain the flexibility of regulating their imports and to generate tariff revenues when needed”.
“While the profits and revenues of the digital players are rising steadily, the ability of the governments to check these conspicuous imports and generate additional tariff revenues is being severely limited because of the moratorium on customs duties,” the paper noted. This is crucial as most of the developing countries are net importers of electronic transmissions and the moratorium takes away this flexibility from them.
Members of the World Trade Organisation (WTO) had, in December 2019, extended the moratorium on ecommerce transmissions from the imposition of customs duties by six months till June. A plurilateral joint statement Initiative group on ecommerce, including major digital players such as the USA, Japan, Australia, Singapore and the European Union (EU) have sought a permanent moratorium. India and South Africa have opposed the suggestion.
The moratorium, which was introduced in 1998, has been extended by the WTO every two years. In December last year, the world body extended it for another six months, pending a final decision to continue it, which was expected in June 2020.