The United States Trade Representatives (USTR) office announced that it would be investigating digital services taxes (DST) that have been adopted or are being considered by a number of the nation’s trading partners.
Key Facts
- The probe is aimed at specifically at taxes on digital services provided by non-resident businesses.
- The issue is that these taxes discriminate against U.S. tech companies.
- Primarily this impacts large tech companies. However there are concerns that it could spill over into all e-commerce sales.
Nations that could be under investigation include India, Indonesia, Brazil, the UK and several EU nations.
India, for example, adopted a 2% DST in March 2020. The tax applies to goods and services sold online by non-resident companies with revenue greater that US$250,000 per year.
France has a 3% levy on revenue from certain online activities, such as advertising and e-retail, that could be seen as discriminating against American technology companies.
The investigations are taking place under Section 301, U.S. trade law adopted in 1974 that allows the U.S. president to unilaterally impose tariffs or other trade restrictions on foreign countries.
