U.S. begins probe into digital services taxes imposed by India, others

Elias Hubbard
June 3, 2020

"President Trump is concerned that many of our trading partners are adopting tax schemes created to unfairly target our companies", USTR Robert Lighthizer said in a statement.

Observers say the USA is trying to deter other countries from adopting digital services taxes by hinting that it may impose retaliatory measures. "We are prepared to take all appropriate actions to defend our businesses and workers against any such discrimination", he enunciated.

Following a similar trade investigation against France a year ago, the US Trade Representative office now is looking into taxes in Britain and the European Union, as well as Indonesia, Turkey and India.

The Internet Association industry trade group said the probe was needed since a growing number of countries had proposed or enacted digital taxes despite the OECD negotiations. "Available evidence suggests the DSTs are expected to target large US-based tech companies", he said.

The United States is investigating digital services taxes being adopted or considered by Britain, Italy, Brazil and other countries, the US Trade Representative's office said on Tuesday (June 2), a move that could lead to new punitive tariffs and heighten trade tensions.

The tax applies only to companies with annual revenues in excess of approximately Rs 20 million (approximately $267,000).

France then suspended collection of the tax until the end of 2020.

A Federal Register notice was also issued in this regard.

A Federal Register notice issued by the agency says that in the case of tax policy, the investigation will look into the divergence DST norms may take as compared to the USA tax system and the worldwide tax system in several respects, including extraterritoriality; taxing revenue not income, and the goal of penalising particular technology companies for their commercial success.

Digital commerce has emerged as a powerful engine of economic growth and job creation. We urge all parties to double down on those negotiations and avoid unilateral, discriminatory taxes, Brilliant said.

Other reports by Click Lancashire

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