USTR Probes Digital Services Taxes From EU, UK, Others; ITI Backs Investigation

The Office of the U.S. Trade Representative is starting Trade Act Section 301 investigations into digital services taxes (DSTs) that were adopted or are under consideration, the agency said Tuesday. Investigations focus on Austria, Brazil, the Czech Republic, EU, India, Indonesia, Italy, Spain, Turkey and the U.K. Comments are due July 15. Evidence "suggests the DSTs are expected to target large, U.S.-based tech companies," USTR said. "The European Commission is considering a DST as part of the financing package for its proposed COVID-19 recovery plan." The EU's delegation to the U.S. didn't comment. The "investigation initially will focus on the following concerns with DSTs: discrimination against U.S. companies; retroactivity; and possibly unreasonable tax policy," the USTR said. While the Information Technology Industry Council "hoped to avoid further escalation of tensions, increasingly-expansive unilateral tax measures have necessitated a stronger response,” said CEO Jason Oxman. “ITI continues to support the U.S. government’s efforts to investigate these complex trade issues." Tariffs are a possible result of Section 301 investigations. The agency previously started a Section 301 investigation into France over such taxes and tariffs that were proposed but not implemented (see 1912030002). “An increasing number of countries have proposed or enacted discriminatory and unilateral digital taxes in recent months, despite ongoing [OECD] negotiation," noted Internet Association Director-Trade Policy Jordan Haas. "The U.S. must continue sending a strong message to trading partners that targeted discriminatory taxes against U.S. firms are not an appropriate solution." Instead of "unilateral DSTs, the world needs a multilateral solution," said U.S. Chamber of Commerce Head-International Affairs Myron Brilliant. "The Chamber supports efforts to address these challenges through multilateral negotiations under the aegis of the OECD. We urge all parties to double down on those negotiations.”