1. Purpose: Equalization Levy is designed to ensure that multinational digital companies pay their fair share of taxes in the countries where they generate revenue, even if they don't have a physical presence there.
2. Scope: It typically applies to online advertising, digital platforms, and e-commerce transactions. The specific services and revenue thresholds vary from country to country.
3. Rate: The levy is imposed at a fixed rate on the gross consideration received by the service provider. The rate can also vary depending on the country.
4. Collection: In most cases, the responsibility for collecting and remitting the levy falls on the non-resident service provider. They are required to deduct the levy from payments received from customers in the country and remit it to the tax authorities.
5. Challenges: Equalization Levy has faced criticism and challenges, including concerns about double taxation and its impact on trade. It can also be complex to implement and enforce.
6. International Agreements: Some countries have sought to address these challenges through international agreements and negotiations, such as those led by the OECD to create a more uniform approach to digital taxation.
