Fears of new trade war as U.S. slams India, Italy, Turkey on ‘unreasonable’ digital taxes

Digital services taxes adopted by India, Italy and Turkey discriminate against U.S. companies and are inconsistent with international tax principles, the U.S. Trade Representative’s (USTR) office said on Wednesday, paving the way for new round of retaliatory tariffs.

digital taxes

David Lawder for Reuters:

USTR, releasing the findings of its “Section 301” investigations into the digital taxes, said it was not taking specific actions at this time, but “will continue to evaluate all available options.”

USTR has concluded the digital taxes imposed by France, India, Italy and Turkey discriminate against big U.S. tech firms, such as Google, Facebook, Apple and Amazon.com

In the latest report, it also said the Indian, Italian and Turkish taxes were “unreasonable” because they are “inconsistent with principles of international taxation, including due to its application to revenue rather than income, extraterritorial application, and failure to provide tax certainty.”

MacDailyNews Take: 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.

Also today, the USTR announced it has “determined to suspend the tariff action in the Section 301 investigation of France’s Digital Services Tax (DST). The additional tariffs on certain products of France were announced in July 2020, and were scheduled to go into effect on January 6, 2021. The U.S. Trade Representative has decided to suspend the tariffs in light of the ongoing investigation of similar DSTs adopted or under consideration in ten other jurisdictions. Those investigations have significantly progressed, but have not yet reached a determination on possible trade actions. A suspension of the tariff action in the France DST investigation will promote a coordinated response in all of the ongoing DST investigations.”

3 Comments

  1. Really? I can’t take seriously any claims of “foul” in this, the lamest of lame duck, administrations. FAANG should have told USTR to hold off for three weeks if they wanted the whine to be taken seriously by anyone.

    1. From the full Reuters’ article: “The probes are among several still open USTR Section 301 investigations that could lead to tariffs before President Donald Trump leaves office or early in the administration of President-elect Joe Biden. Among these is a more advanced probe into France’s digital services tax.”

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