India will seek for multinational windfall tax hike

India is planning to advocate for an increase in the windfall tax imposed on multinational companies.

New Delhi is seeking to modify the significant 2021 corporate taxation agreement to obtain a larger portion of taxes from multinational companies.

According to sources familiar with the discussions, India is considering requesting a higher share of taxes from multinational companies operating within its borders under the upcoming 2021 corporate taxation deal. This deal is set to be implemented next year. Reuters published the report on Sunday.

According to reports, New Delhi is expected to suggest an amendment at the upcoming G20 finance ministers and central bankers meeting in Gujarat this week.

In a significant development, the G20 nations and the countries of the Organisation for Economic Cooperation and Development (OECD) signed a historic deal in 2021. This deal has been joined by over 140 countries and jurisdictions, which collectively account for more than 90% of the global GDP.

The agreement aims to change how governments tax multinational companies like Apple and Google, which operate in multiple countries and can report their profits in countries with lower tax rates. The agreement establishes a minimum tax rate of 15% for these companies. Additionally, there will be an extra tax of 25% on their "excess profits," which refers to annual revenues over $22 billion that surpass 10% of annual growth.

As reported by Reuters, India is pushing for higher taxes to be paid by companies in the countries where they operate. The report did not mention the specific increase in size that India requested.

According to a source, India has proposed measures to ensure it receives its fair portion of taxes on the extra profits from multinational companies.

According to reports, New Delhi plans to suggest a change in the withholding tax system. This change would separate the withholding tax, which companies collect from payments to vendors and employees and then send to tax authorities, from the excess profit tax principle. In the current agreement, countries use the withholding tax they collect to offset their portion of taxes.

India has already presented these suggestions to the OECD; the recommendations will be discussed during the G20 meeting scheduled for Monday and Tuesday.