Will FB, Google Now Have To Pay 40% Tax In India?

Will FB, Google Now Have To Pay 40% Tax In India?

It won’t be an understatement to say the new social media guidelines or Information Technology (Guidelines for Intermediary and Digital Media Ethics Code) Rules, 2021 have created havoc amongst the social media giants. While the content disruption was expected, the new possibility of a substantial tax rate increment is disturbing. Is this India’s way of making these tech giants pay? Well, find out yourself here.

Crux of the Matter

As per new social media guidelines, the tech giants have to introduce offices of:

  • Compliance Officer
  • Nodal Contact Person
  • Grievance Redressal Officer

These offices are to be held by the Indian Residents only.

How Does Taxation Come in Picture?
These new offices might be argued to fall under the purview of Permanent Establishments (PE) as per the Indian Taxation System. As per the Indian Income Tax Act: “PE includes a fixed place of business through which the business of the enterprise is wholly or partly carried on.”

Purpose of A PE
It is the status of PE that determines under which country’s laws, will the MNCs be taxable and up to what extent. The law is in place to avoid double taxation for firms operating in multiple nations.

Ongoing Rates

  • Since the PEs aren’t based out of India, the domestic entities pay tax only on fees or profit margins from a foreign entity.
  • A 6% of equalisation levy (advertisement revenue) and 2% on digital transactions is currently charged by the Indian govt.

The Expected Disruption
Now with the three offices expected to be working 24×7 in India,  as per PE norms, a large portion of the amount earned out of India
is expected to be taxed at a 40% slab rate.

Final Thoughts
If at all the PE criteria is triggered from the govt’s end, these firms can still argue that these offices are just ancillaries to the main firm – thus keeping the present tax rate intact.

  • The motto of the Income Tax Department of India is “Kosha Moolo Dandah”, coined by Chanakya. It means “Treasury is the root of administration”.
  • Only 1% of the Indian population pays income tax.
  • James Wilson, the founder of The Economist newspaper, was also British India’s first Finance Minister. He is responsible for introducing Income Tax in British India.

Hunger For Social Media Likes = Animals Seeking Food?

As per a new study published in the journal Nature Communications, parallels can be drawn between behaviour of animals in seeking food rewards and human’s seeking social media likes. Let’s learn more about how this “reward learning” works.

Crux of the Matter

Reel Over Real?
These days, some people choose positive online social feedback such as “likes” and “shares” over socializing with actual people and basic needs like eating and drinking.

What Is This New Study?
To examine these motivations, 1 million+ social media posts were analysed, from over 4,000 users on Instagram and other sites and apps.

Why Do We Do What We Do?
They found that people post less, in the case of lower likes. Computational models revealed that this is similar to reward learning, which uses incentives to change the behaviour of a human or an animal.

Food First For Animals…
Animals like rats maximize their food rewards in a Skinner Box. It is a tool in which the subjects placed in it accesses food by taking certain actions like pressing a lever.

And Likes For Us?
These results were further tested in an online experiment, where humans could post memes and receive likes as feedback. So they posted more when they received more likes.

Dopamine Boost
It’s not the reward itself, but the expectation of a reward that powerfully influences our emotional reactions and memories. The spots are parts of the brain that are activated on getting a reward.

What’s Next?
These findings can help researchers understand more about social media addiction and how we can become more self-aware about it.

  • Attention economics is an approach to the management of information that treats human attention as a scarce commodity and applies economic theory to solve various information management problems. According to Matthew Crawford, “Attention is a resource—a person has only so much of it.”
  • The first like button was created in 2005 at Vimeo, with a team comprising Andrew Pile, Jake Lodwick, Kunal Shah, and Zach Klein. It was meant to be a more casual alternative to “favorites“, and was heavily inspired by “Diggs” from the site Digg.com.
  • In 2017, a man was fined 4,000 Swiss francs by a Swiss regional court for liking defamatory messages on Facebook written by other people which criticized an activist. According to the court, the defendant “clearly endorsed the unseemly content and made it his own“.

Kerala Proposed Jail For Offensive & Abusive Posts

Kerala Proposed Jail For Offensive & Abusive Posts

As Kerala withdrew its Police Act Amendment after strong backlash, let us look at the provisions of the Amendment and the reaction it generated.

Crux of the Matter

Kerala Police Act Amendment
An Amendment in the Kerala Police Act was recently passed, with a new Section 118 (A) being added to it. The Amendment brings imprisonment for social media/online posts deemed offensive/threatening, with a punishment of 3-5 years jail or ₹10,000 fine or both. However, the Amendment was withdrawn amidst strong protest.

Kerala CM Pinarayi Vijayan claimed that the move was brought amidst increasing abuse against individuals on social media. Increased fake news and hate speech since Covid-19 pandemic were also cited as reasons. The Amendment incorporates punishment for “threatening, abusing, humiliating or defaming a person or class of persons, knowing it to be false and that causes injury to the mind, reputation or property”.

The Left Democratic Front is the ruling group in Kerala, being lead by CPM (Communist Party of India (Marxist)). Vijayan belongs to the CPM.

Congress MP Shashi Tharoor labelled the move “shocking”, and demanded to “narrow its application to flagrant cases of abuse & threats only”.

K Surendran, BJP Kerala President, called the act “draconian” and “an attempt to stem the rising public sentiment against the state government”.

The government claims that Section 118(A) is meant to protect people, particularly women, from social media abuse. But in reality, the new law would be used by the authorities and government against those who criticise them.

Anoop Kumaran, Advocate

In Favour

  • Kerala government assured no curbing on reporting and “political satire or commentary”. Claimed that it restricts only targeted abusive content.
  • The incident concerning a YouTuber in September cited as an illustration by Government. Women activists allegedly assaulted a YouTuber who used vulgar remarks for women in videos. Vijayan and Kerala Health Minister K K Shailaja supported the activists although warning them “not to take law into their own hands”.
  • Critics have cited the Amendment necessary as harassment and abuse of women has reportedly been on a rise since the lockdown.
  • According to the IT Act, 2011, social media channels are to take down content if a court or law enforcement asks them to do so. Users too can exercise discretion and report a post that violates community guidelines according to them and needs to be taken down.
  • In March 2014, Turkey banned Twitter in the face of government corruption scandals. It blocked YouTube for 30 months after a video insulting the founder of modern Turkey was uploaded to the site.  In 2015, Twitter, Facebook, and YouTube were blocked to stop images of state prosecutor Mehmet Selim Kiraz from being shared online.
  • A few ways to censor the internet is DNS filtering in which the authorities can block access through DNS hijacking, which returns the wrong IP address, or by not resolving the domain. Another method is Packet filtering. Keywords are monitored and TCP packet transfers are ended if certain words are detected.

Hooked to ‘The Social Dilemma’?

figurines music

Finding ‘The Social Dilemma‘ all over the news off late and wondering what’s the hyper about? Well, we’ll tell you more about the viral documentary film and the views of critics and its impact on the users of social media and smartphones.

Crux of the Matter

What Is It About?
Netflix’s documentary film explores the rise of social media, focusing on its exploitation of users for financial gain. It goes on to tell how social networking sites are designed to nurture an addiction, spread conspiracy theories and dire effects on mental health of both teenagers and adults alike.

Who All Feature In It?
The film contains interviews with famous folks like former Google design ethicist, co-founder Tristan Harris,fellow Center for Humane Technology co-founder Aza Raskin, Facebook like button co-creator Justin Rosenstein, AI Now director of policy research Rashida Richardson, Stanford University Addiction Medicine Fellowship program director Anna Lembke, and virtual reality pioneer Jaron Lanier. It also involves actors playing a family dealing with a teenager’s social media addiction.

Who Is The Creator?
Emmy Award-winning filmmaker Jeff Orlowski. His most famous documentaries include Chasing Ice (2012) and Chasing Coral (2017), which tells a gripping story of changes in Earth’s climate, brought on by global warming and disappearing coral reefs. So what they did for highlighting real time events of climate change, “The Social Dilemma” will do for Facebook.

Our Data Used As Their Currency?
The relationship between persuasive technology and human behavior is featured by Orlowski, discussing how addiction isn’t a side effect of social media, but rather the industry’s business model that wants more and more of our time and personal data, in order to populate familiar things in our feeds and make us hooked on their products.

Facebook In Defense Mode
It has already started, with the Facebook CEO, Mark Zuckerberg hitting back at the documentary for sensationalisation. In a 7 point rebuttal, Facebook says “The film’s creators do not include insights from those currently working at the companies or any experts that take a different view to the narrative put forward by the film.”

What Do The Experts Say?
Being in the top ten list of Netflix for more than a month now, Viewers and critics alike suggest how it throws the limelight on the invisible force driving us from morning to evening i.e smartphones and social media. Documentaries like these can help us become more aware of these daily use products and how we can use them more responsibly.

What Is The Irony?
You just read about the film here, on our Instagram stories. If you are curious, you will watch the documentary on Netflix. Then if you like it, you will chat with your friends about it on Whatsapp, Facebook Messenger or any other messaging app trending lately.

  • The Great Hack is a 2019 documentary film about the Facebook–Cambridge Analytica data scandal. The Great Hack premiered at the 2019 Sundance Film Festival in the Documentary Premieres section and was released by Netflix in July, 2019.
  • The Social Network is a biographical drama film directed by David Fincher based on the 2009 book, The Accidental Billionaires. It was named one of the best films of the year by 78 critics, and named the best by 22 critics, the most of any film that year. The film recently completed 10 years.
  • Netflix was founded in 1997 by Marc Randolph and Reed Hastings. Netflix’s initial business model included DVD sales and rental by mail. Netflix expanded its business in 2007 with the introduction of streaming media while retaining the DVD and Blu-ray rental business.

New Law in Turkey Gives Added Social Media Power To Govt

New Law in Turkey Gives Added Social Media Power To Govt

A law was been passed by the Turkey government recently that lets the government store user data found in their social media accounts. What’s the motive behind this move? What do the critics have to say?

Crux of the Matter

What Happened?
The Turkish lawmakers passed legislation on 29th July that gives them the authority to regulate social media content. This has raised concerns about the country falling under greater governmental control, as social media was one of the few places for free public debate in Turkey. Starting from Oct. 1, it requires social media companies to store user data in the nation’s internal servers itself.

What Does The Bill State?
It orders popular social giants like Facebook, Twitter, and YouTube, to open offices in Turkey and impose strict rules.

These offices would be responsible for meeting the demands of both the individuals and government. They can block content hosted on their platforms that is deemed inappropriate.

What If They Don’t Obey?
The dire consequences of disobeying the law would be slowing the bandwidth of the sites and making them mostly inaccessible. Moreover, the company offices would have 48 hours to comply and the fine for being late would be $700,000+.

Experts’ Take On Why It Was Passed
President Recep Tayyip Erdogan and governing A.K.P. party behind the legislation cited that this move was needed to “protect citizens from cybercrime.”

Critics say that things took a personal turn when the president’s family was being targeted in social media criticism. Many reporters have been jailed to date, and many have left the country in fear.

As it is offline, conventional media houses are under the scanner of the Turkish government, with 90% of them being controlled by businesses close to the government. Now, this law would be the start of an online censorship regime.

History Of Its “Online Mess”

  • In 2016 before an attempted coup, Turkey had seen an online battle of the government loyals and the general public.
  • In 2017 Wikipedia was banned there, till it was lifted this year.
  • In 2019, streaming services like Netflix were targeted, with entertainment programs being rigorously censored. The series “If Only” was even cancelled as a result, because it was based on a gay character.

  • A Black and White photo challenge is a recent social media trend which has started from Turkey, where the campaign is associated with raising awareness about femicide in the country. It is so because, b&w photos of murdered women are shown in the country’s media.
  • The Justice and Development Party, abbreviated officially AK Parti in Turkish, is a conservative political party in Turkey. The current party leader is Recep Tayyip Erdoğan, the incumbent President of Turkey.
  • Yeşilçam is the sobriquet that refers to Turkish film art and industry. The first Turkish-made film was a documentary entitled Ayastefanos’taki Rus Abidesinin Yıkılışı (Demolition of the Russian Monument at San Stefano), directed by Fuat Uzkınay and completed in 1914.