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US to impose tariffs over digital taxes, but action on hold for now

The United States said Wednesday it will impose tariffs on six countries such as Britain and India over their taxes on U.S. tech companies, but noted that the action will be put on hold amid ongoing negotiations on international taxation.

The announcement from the Office of the U.S. Trade Representative followed an investigation it started in June last year into the digital services taxes being considered or adopted by U.S. trading partners — Austria, Brazil, Britain, the Czech Republic, the European Union, India, Indonesia, Italy, Spain and Turkey.

The United States sees such taxes as a concern as they could burden U.S. companies such as Apple Inc. and Google LLC.

In January this year, the USTR determined that the taxes adopted by Austria, Britain, India, Italy, Spain and Turkey discriminated against U.S. digital companies and were inconsistent with principles of international taxation.

“The final determination in those investigations is to impose additional tariffs on certain goods from these countries,” the USTR said in its press release Wednesday.

But the tariffs will be suspended for up to 180 days to provide additional time to complete the ongoing multilateral negotiations on international taxation at the Organization for Economic Cooperation and Development and in the Group of 20 process.

“The United States is focused on finding a multilateral solution to a range of key issues related to international taxation, including our concerns with digital services taxes,” USTR Katherine Tai was quoted as saying.

According to a USTR report released in January, Britain’s digital services tax applies a 2 percent levy on the revenues of certain search engines, social media platforms and online marketplaces.

The USTR said the system “unfairly” targets U.S. companies because it only pertains to the three specific categories in which U.S. firms are marketplace leaders.

India’s digital services tax imposes a 2 percent levy on revenue generated from a broad range of digital services offered in the South Asian country. The taxes explicitly exempt Indian companies while targeting non-Indian firms, according to the USTR.

The USTR, meanwhile, has terminated the remaining four investigations involving Brazil, the Czech Republic, the European Union and Indonesia, saying that those jurisdictions had not implemented the digital services taxes under consideration.

Source: United News of Bangladesh