Digital services taxes discriminatory, inconsistent

    In January this year, the United States Trade Representative 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.
    Its report released in January says Britain’s digital services tax applies a 2 percent levy on the revenues of certain search engines, social media platforms, and online marketplaces.
    It further says the system “unfairly” targets U.S. companies because it only pertains to the three specific categories in which U.S. firms are marketplace leaders.
    Meanwhile, India’s digital services tax imposes a 2 percent levy on revenue generated from a broad range of digital services offered there. The taxes explicitly exempt Indian companies while targeting non-Indian firms, according to the USTR.
    The USTR 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.

    WASHINGTON — The United States is keen on imposing tariffs on six countries, including Britain and India, over their taxation on U.S. tech companies, it announced last week.

    Although the announcement from the Office of the U.S. Trade Representative (USTR) was made, the action is put on hold pending ongoing negotiations on international taxation. It has started in June last year a probe into the digital services taxes being considered or already adopted by U.S. trading partners—Austria, Brazil, Britain, the Czech Republic, the European Union, India, Indonesia, Italy, Spain and Turkey.

    Apart from seeing the taxes as a concern that could burden U.S. companies such as Apple Inc. and Google LLC, the USTR in January this year 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 says in its statement.

    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 tariffs is suspended for up to 180 days.

    “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,” says USTR Katherine Tai. (TC/The MiNT)

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