The US Trade Representative said that it has decided to suspend the tariffs in light of the ongoing investigation of similar DSTs adopted or under consideration in ten other jurisdictions.
The US Trade Representative on January 7 announced that it has determined to suspend the retaliatory tariff action in the Section 301 investigation of the French digital services tax (DST).
The additional tariffs on certain products of France were announced in July 2020 and were scheduled to go into effect on January 6, 2021.
The US Trade Representative said that it has decided to suspend the tariffs in light of the ongoing investigation of similar DSTs adopted or under consideration in ten other jurisdictions.
“Those investigations have significantly progressed but have not yet reached a determination on possible trade actions. A suspension of the tariff action in the France DST investigation will promote a coordinated response in all of the ongoing DST investigations,” it said.
Responding to the development, EU Trade Commissioner Valdis Dombrovskis said in a tweet: “We take note of the US decision to postpone its unilateral trade measures against France relating to its Digital Service Tax. We stand ready to engage with the US to find a solution. However, all such issues should be resolved at the World Trade Organization.”
“The EU stands ready to explore all options should the US unilaterally apply these trade measures. More broadly, we are willing to work constructively with the US on finding a timely global solution to the fair taxation of the digital sector.”
In 2019, the US Trade Representative found that the three percent French DST discriminates against US companies, is inconsistent with prevailing principles of international tax policy, and is unusually burdensome for affected US companies such as Amazon, Apple, Facebook, and Google.
French Finance Minister, Bruno Le Maire, had then termed the US’ proposed action as “unacceptable.” “In case of new American sanctions, the European Union would be ready to riposte,” he was reported to have told Radio Classique.
Section 301 give the US Trade Representative broad authority to investigate and respond to a foreign country’s unfair trade practices.
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable at editor@transferpricingnews.com