US Fights Digital Taxes With Import Taxes
April 23, 2021
The United Kingdom, Spain, Italy, Turkey, Austria, and India are six countries levying a digital service tax own social media companies, search engines, and online retailers. Most of these companies are American. The Office of the US Trade Representative (USTR) conducted a six-month investigation and decided the new digital tax “unreasonable, or discriminatory and burdens or restricts US commerce.” Roll Call explains how the Biden Administration plans to handle the digital tax: “US Confronts ‘Digital Dagger’ From Overseas Aimed At Top Tech Companies.”
The Biden administration plans to leverage a 25% tariff on imported goods from the six countries. The European Union, Indonesia, Brazil, and the Czech Republic might adopt similar taxes. Trump’s administration had the USTR investigate France’s digital taxes and came to the same conclusion, but did not respond following an ongoing investigation with Organization of Economic Cooperation (OECD) and Development and the G-20 group.
The USTR wants to develop a solution with the OECD, but it comes with tons of baggage:
“The friction between the United States and its top tech companies and the rest of the world stems from how the global economy has shifted toward a model in which companies based in one country earn profits from delivering services to citizens of another country without establishing a physical presence, said Clete Willems, a partner in the law firm of Akin, Gump, Strauss, Hauer & Feld LLP who served in the White House as a top trade adviser during the Trump administration. The OECD has been discussing how to determine taxing rights when companies have no physical presence in a country and which companies should be considered digital entities…”
American companies feel targeted because they are reaping the profits of their handwork, but the foreign countries are not getting needed tax revenue to fund their own economies. It is not a digital dagger, but a double edge sword.
Whitney Grace, April 23, 2021
Comments
-
- Subscribe to Beyond Search
Feature archive
News archive
-
