On Tuesday, in a move that could lead to new retaliatory tariffs, the U.S. Trade Representative’s office said it was launching a “Section 301” investigation into taxes on digital services adopted or under consideration by a number of U.S. trading partner nations.
“President Trump is concerned that many of our trading partners are adopting tax schemes designed to unfairly target our companies,” U.S. Trade Representative Robert Lighthizer said in a statement. “We are prepared to take all appropriate action to defend our businesses and workers against any such discrimination.”
U.S. President Donald Trump based his nearly two-year trade war with China on a Section 301 investigation into Beijing’s intellectual property and technology transfer practices.
Several European countries are considering such a digital-services tax to raise revenue from the local businesses of companies including Google and Facebook.
Broad negotiations through the OECD to set a global standard for digital taxes have proven elusive, and the coronavirus pandemic has slowed them down.
In a Federal Register notice, the USTR said the probe would cover digital services taxes adopted or under consideration by Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey and Britain.
MacDailyNews Take: Last December, the U.S. vowed 100% tariffs on $2.4 billion in imports from France over such a digital tax that would harm U.S. tech firms including Apple.
As we wrote back in April 2019:
As per the EU itself, the smart approach for Apple et al. is to lobby for harmonized EU taxation over a state-by-state patchwork of taxes, as that will at least offer simplicity, stability, and predictability.
As long as the principle is that companies pay tax in the jurisdiction in which they generate their income and that it is applied equally to local and foreign-owned companies in a non-discriminatory fashion, it’s good policy and will help reduce companies shuffling money around between countries to avoid paying tax.
It should be accompanied by companies not having to double pay tax when they repatriate funds back to their home country. If the required taxes are proved to have already been paid, they should not have to be paid again. The home country benefits from the repatriated funds being spent by those companies in further investments, payments to shareholders, etc. which generates further local taxes via the multiplier effect.
Great idea. That is what everyone has been negotiating, but Europe cannot do it without American agreement.
And therein lies the problem, America won’t agree to a global tax. If you can’t get an agreement then eventually you have to go it alone. Then America applies tariffs. What a mess. So who do think is causing the delay over having a worldwide tax?
Tax his land,
Tax his bed,
Tax the table
At which he’s fed.
Tax his tractor,
Tax his mule,
Teach him taxes
Are the rule.
Tax his work,
Tax his pay,
He works for peanuts ;
Anyway!
Tax his cow,
Tax his goat,
Tax his pants,
Tax his coat.
Tax his ties,
Tax his shirt,
Tax his work,
Tax his dirt.
Tax his tobacco,
Tax his drink,
Tax him if he
Tries to think.
Tax his cigars,
Tax his beers,
If he cries
Tax his tears.
Tax his car,
Tax his gas,
Find other ways
To tax his ass.
Tax all he has
Then let him know
That you won’t be done
Till he has no dough.
When he screams and hollers;
Then tax him some more,
Tax him till
He’s good and sore.
Then tax his coffin,
Tax his grave,
Tax the sod in
Which he’s laid.
Put these words
Upon his tomb,
‘Taxes drove me
to my doom…’
When he’s gone,
Do not relax,
Its time to apply
The inheritance tax.
I assume that you are a purist about taxes. Neither you nor your children received any education that was funded by taxes or benefitted from tax exemptions. Nobody inspected your home or septic tank. You trust your neighbor not to leak raw sewage, since you would have no recourse if he did. You have never received medical care in a facility that has received government funding or from a doctor trained at such a facility or one whose training was funded by government grants or guaranteed loans.
You would refuse services from a government EMT, firefighter, or peace officer. You have enough guns to defend yourself and your family from a gang capo or warlord and his followers.
You would placidly accept criminal, contract, or tort damages rather than use a government court. If sued, you would accept liability for the same reason. You would never file criminal charges and if charged you would refuse the services of any government licenced lawyer. You expect to pay the fair market value for your prison food and housing, although in a stateless society you could probably sell your wife and daughter.
You avoid gas taxes by never using a government-controlled road. You have figured out a way to reach the store without using such roads, sidewalks, or trails. When you reach the store, you do not expect any of the food, medicines, or other goods to have been inspected for safety. You need to barter, rather than use government money or participate in a regulated economy.
Finally, you have brushed up on your Russian and Chinese, since you do not accept protection from the armed forces.
Taxes: Excellent. I’ll be sending it to everyone I know that knows how pitiful the onerous tax burdens have become. Thank you.
As far as I know Apple is taxed in Ireland, an EU country, and it has been challenged by France first and followed by EU… EU should first clean it’s doorstep and WTO should follow.