Tax Analysts (paywall) report this morning that:
According to a January 31 Press Trust of India report, Google argued in [an] affidavit that it does not provide taxable services in India, does not earn income in India, and does not have permanent establishment in India. It also said it does not receive royalty payments of any kind that are taxable under Indian law.
Google, let me remind you, carries considerable numbers of adverts placed by Indian companies and has a very specifically Indian website:
But we are back, of course, to Google relying on a logic of tax that defies all common sense and very obvious factual accuracy to claim that despite the very clear substance of it earning in India the legal form of the structure it has constructed says that the income in question arises elsewhere.
The OECD has already said that the Base Erosion and Profits Shifting project, - launched with much huff and puff by the likes of David Cameron last year to deal with such obvious egregious tax abuse as that of Google - cannot address this high tech abuse.
Does that mean wealth will continue to be stripped from india with impunity? My suggestion is it will not. India, and others will simply turn their backs on the international norms that are so obviously absurd and begin to create new ones. If they do I, for one, will welcome it. I hope India has to courage to begin this process, now.