US hints at incoming tariffs to respond to ‘discriminatory’ digital taxes

5 Jun 20

The US government has taken a step towards introducing tariffs to retaliate against digital taxes on ‘internet giants’ that are being pursued by several other countries as well as the European Union.

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US president Donald Trump. Credit: The White House

US president Donald Trump. Credit: The White House

 

Washington has long believed that digital services taxes are discriminatory, given that they disproportionately affect US-based companies, and the office of the US trade representative Robert Lighthizer has opened an investigation.

DSTs being investigated include those either adopted or under consideration in Austria, Brazil, the Czech Republic, India, Indonesia, Italy, Spain, Turkey, the UK and the EU.

“President [Donald] Trump is concerned that many of our trading partners are adopting tax schemes designed to unfairly target our companies," said US trade representative Robert Lighthizer.

“We are prepared to take all appropriate action to defend our businesses and workers against any such discrimination.”

In January, Lighthizer concluded an investigation into France’s DST that it approved last summer, which was followed by President Trump announcing tariffs on French cheese, sparkling wine and some designer goods.

The two countries agreed to cooperate via a process currently underway at the OECD, which officials hope will lead to an international consensus on the perceived problems with taxing multinationals with little or no physical presence in the countries where they make revenue from digital services.

The OECD believes that if its work fails, countries will introduce their own DSTs at a much faster rate, leading to a confusing tax patchwork around the world and leading to trade wars breaking out, disrupting the global economy even further.

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