The US Trade Representative (USTR) said on Wednesday that the digital services taxes adopted by India, Italy, and Turkey in recent years discriminate against U.S. companies. USTR had started investigations into the matter back in June last year, using the Section 301 of the U.S. Trade Act of 1974 . After 9 months, USTR has found that taxes levied by these countries are inconsistent with international tax principles, unreasonable, and burdening or restricting U.S. commerce.
The Trade Representative claims that these findings are supported by comprehensive reports which they have published on the USTR website. They also have informed that despite of these findings, they will not take any specific actions “at this moment” however “will continue to evaluate all available options”.
USTR has been conducting investigations on DSTs introduced by a number of countries, including Austria, Brazil, the Czech Republic, the European Union, Indonesia, Spain, the United Kingdom, and France, and aims to announce the progress or completion of additional DST investigations in the near future.
India, one of the largest markets for US firms like Google and Facebook by users, has been levying digital taxes since 2016. Last year, India expanded the scope of its levy to cover additional categories. USTR says that the government is levying taxes on “numerous categories of digital services that are not leviable under other digital services taxes adopted around the world”. It also alleged that India targets foreign firms to levy taxes on grounds that are not applicable to local companies. The tax bill for a US company, in India, can exceed $300 million per year.
USTR had set January 6 as the deadline for implementing 25% tariffs on French cosmetics, handbags, and other imports. The probes can lead to tariffs before President Donald Trump leaves office or in the early days of the Joe Biden administration. However, it is still unclear of those duties would begin on time.