March 29 2021

United States Announces Next Steps of Digital Services Taxes Investigations into 10 Jurisdictions

Source: IBFD Tax Research Platform News

The Office of the US Trade Representative (USTR) has announced the next steps in its investigations of the Digital Services Taxes (DSTs) adopted or under consideration by 10 jurisdictions. Specifically, the USTR proposed to impose additional tariffs against Austria, India, Italy, Spain, Turkey and the United Kingdom (UK). The USTR also terminated its DST investigations into Brazil, the Czech Republic, the European Union (EU) and Indonesia.

The USTR issued a Press Release of 26 March 2021 to make the announcement.

According to the Press Release, the USTR proposed the imposition of, and requested public comments on, additional tariffs of up to 25% ad valorem (i.e. according to the value) that would collect duties on goods of the following six jurisdictions approximately in the amount of the DST that the jurisdiction is expected to collect from US companies:

  • Austria (up to approximately USD 45 million per year);
  • India (up to approximately USD 55 million per year);
  • Italy (up to approximately USD 140 million per year);
  • Spain (up to approximately USD 155 million per year);
  • Turkey (up to approximately USD 160 million per year); and
  • the UK (up to approximately USD 325 million per year).

In addition, the USTR terminated its investigations into the four jurisdictions (Brazil, the Czech Republic, the EU and Indonesia) based on its finding that the four jurisdictions have not adopted or implemented the DSTs that were under consideration when the USTR initiated the investigations. The Press Release notes, however, that the USTR may initiate new investigations if any of those jurisdictions proceeds to adopt or implement a DST.

The USTR previously issued a Status Update, dated 13 January 2021, discussing the status of those four jurisdictions' consideration of a possible DST and expressing US concerns that DSTs may be adopted in the future.