US suspends digital services tax retaliatory tariffs

On June 2, 2020, USTR initiated investigations into digital services tax adopted or under consideration in ten jurisdictions:  Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey, and the UK.

The US Trade Representative (USTR) has suspended tariffs on goods from six trading partners that were to be imposed in retaliation to discriminatory digital services tax introduced by these countries.

On June 2, 2021, USTR announced the conclusion of the one-year Section 301 investigations of digital service tax adopted by Austria, India, Italy, Spain, Turkey, and the UK.  

While the final determination in those digital services tax investigations is to impose additional tariffs on certain goods from these countries, the said tariffs have been suspended for up to 180 days to provide additional time to complete the ongoing multilateral negotiations on international tax at the OECD and in the G-20 process.  

Ambassador Katherine Tai said: “The United States is focused on finding a multilateral solution to a range of key issues related to international tax, including our concerns with digital services tax. The United States remains committed to reaching a consensus on international tax issues through the OECD and G-20 processes. Today’s actions provide time for those negotiations to continue to make progress while maintaining the option of imposing tariffs under Section 301 if warranted in the future.”

On June 2, 2020, USTR initiated investigations into digital services tax adopted or under consideration in ten jurisdictions:  Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey, and the UK.
 
In January 2021, following comprehensive investigations USTR determined that the digital services tax adopted by Austria, India, Italy, Spain, Turkey, and the UK discriminated against US digital companies, were inconsistent with principles of international taxation, and burdened US companies.

In March 2021, USTR announced proposed trade actions in these six investigations, and undertook a public notice and comment process, during which it collected hundreds of public comments and held seven public hearings. USTR also terminated the remaining four investigations (of Brazil, the Czech Republic, the European Union, and Indonesia) because those jurisdictions had not implemented the digital services tax under consideration.