The upcoming 13th Ministerial Conference (MC 13) of the World Trade Organisation (WTO) in Abu Dhabi, scheduled between Feb. 26 and 29, will be a battleground for the continuation or discontinuation of the moratorium on digital customs taxes. If the moratorium, in place since 1998, is not renewed, digital goods and services may face tariffs, leading to potential disruptions in the free streaming of entertainment and global e-commerce.
Developing Countries Oppose Tariff Ban: Three major developing economies—India, Indonesia, and South Africa—are reportedly challenging the renewal of the tariff ban. Developing nations argue that the absence of tariffs on digital goods and services has resulted in significant financial losses for them, while the West, including the US, UK, and EU, has benefited from their dominance in the Big Tech sector.
India, in particular, claims that the loss of revenue to developing nations due to the tariff ban stands at $10 billion. The country argues that the digital economy has undergone exponential growth since the moratorium was first implemented in 1998 and that the impact on industrialization, revenue losses, and other duties and charges must be addressed.
Digital Economy’s Uneven Benefits: A communication circulated at the WTO by India and South Africa highlights the significant gap between developed or “hyper-digitalized” nations and developing countries in the export of digital goods and services. The document emphasizes that the benefits of the digital economy are highly uneven, with developed nations dominating cross-border e-commerce.
India and South Africa propose that the removal of the moratorium would not necessarily mean imposing customs across the board but would boost domestic digital industrialization and job creation, aligning with the concept of “Industry 4.0.”
Ideological Perspectives: The Swadeshi Jagaran Manch (SJM), an economic think-tank associated with India’s ruling party, views the current moratorium as against the interests of developing countries. SJM advocates for the imposition of tariffs on electronic transmission to support digital industrialization in developing nations and counter the monopoly of developed countries and tech giants.
Global Reactions and Uncertainties: Over 180 business groups worldwide support the status quo, fearing potential disruptions to the internet if the moratorium ends. Experts suggest that introducing new taxes would send a shockwave through the WTO.
The United Nations Conference on Trade and Development (UNCTAD) and Western experts argue in favor of maintaining the status quo. The Organisation for Economic Co-operation and Development (OECD) estimates that taxing digital transmission would contribute only about 0.1% to government coffers.
As the debate unfolds at the WTO, the future of digital customs taxes, free streaming, and the dynamics of global e-commerce hang in the balance.
