On 24 November 2021, the United States and India concluded an agreement on a transitional approach to the treatment of the current Indian E-commerce Equalization Levy (EL) in the transition period prior to the full implementation of Pillar 1 addressed by OECD.
Under the agreement, India will collect the tax until 31 March 2024 or until the implementation of Pillar 1 of the OECD agreements on the taxation of multinational companies and cross-border digital transactions, whichever is earlier. The US will suspend its trade tariff measures against India and several other countries announced in June 2021 in response to the levy and will take no further action. The agreement is similar to the compromise on unilateral action reached on 21 October 2021 between the UK, Austria, France, Italy and Spain with the US.
