Tax Treaty Case Law around the Globe 2014
1. Aufl. 2015
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S. 191Chapter 19 India: The Right Florist Case: Online Advertisement Revenues and the Legal Effect of India's Position on the OECD Model
D.P. Sengupta
19.1. Introduction
The case of Right Florist, a small Indian company in Kolkata, brings into sharp relief the current debate that is taking place all over the world about base erosion and profit shifting (BEPS). This company of small or medium size had paid INR 3 million in a year to Google and Yahoo as online advertisement charges. If such is the magnitude of online advertisement from a small company, one can imagine how much Google and Yahoo and suchlike portals generate in the form of total online advertisement revenue from India alone. As the case demonstrates, considering the current state of play in the field of international taxation, the source-country tax base gets eroded and it is difficult to tax such income or any part of the same.
19.2. Facts of the case
The taxpayer is a florist and uses advertising on search engines, i.e. by Google and Yahoo, to generate business. Whenever anyone does a web search on the respective search engines and uses certain keywords, the advertisement is shown along with the search results. The taxpayer had...