Taxing Ads in Mobile Games
Learnings from India’s Equalization Levy
DOI:
https://doi.org/10.46801/2595-7155.16.7.2026.3030Palavras-chave:
Tributação digital, Equalization Levy, Jogos Mobile, Publicidade digital, Monetizaç˜ão de dados de usuáriosResumo
This paper examines the taxation challenges posed by digital advertising in mobile gaming through an analysis of India’s Equalization Levy. The mobile gaming industry’s reliance on advertising revenue creates significant tax policy challenges, as permanent establishment and other traditional tax concepts prove inadequate for capturing value created through user engagement and data collection in market jurisdictions. India’s 2016 Equalization Levy represents a pioneering unilateral approach, imposing a 6% tax on online advertising services to address revenue shifting by non-resident digital companies. However, the levy’s uniform structure fails to differentiate between advertising types that rely on different levels of user engagement and creates substantial tax gaps when foreign entities structure transactions through offshore arrangements. The paper concludes that effective digital advertising taxation requires sophisticated, internationally coordinated frameworks incorporating tiered taxation and user-based allocation keys that properly compensate market jurisdictions for user-generated value.
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