Monday , May 17 2021

US forges ahead on $1 billion tariff plan over digital taxes

Bloomberg

The US is pressing ahead with plans to hit six nations that tax internet-based companies with retaliatory tariffs that could total almost $1 billion annually.
Goods entering the US — ranging from Austrian grand pianos and British merry-go-rounds to Italian anchovies — could face tariffs of as much as 25% annually, documents published by the US Trade Representative (USTR) show. The duties are in response to countries that are imposing taxes on technology firms that operate internationally such as Amazon.com Inc and Facebook Inc.
In each of the six cases, the USTR proposes to impose tariffs that would roughly total the amount of tax revenue each country is expected to get from the US companies. The cumulative annual value of the duties comes to $880 million, according to Bloomberg News calculations.
There have been efforts to replace each individual country’s digital taxes with one global standard — to be brokered by the Organisation for Economic Cooperation and Development (OECD) — but a deal has yet to be reached.
The US says it’s committed to the OECD process, but will maintain its options, including tariffs, in the meantime, USTR Katherine Tai said in a statement.
The Internet Association — whose members include Amazon, Facebook and Alphabet Inc.’s Google — welcomed the USTR’s move.
The USTR’s action “is an important affirmation in pushing back on these discriminatory trade barriers as the US continues to work to find a viable solution at the OECD,” the group said in a statement.
The USTR has invited public comment on its plans to go ahead with the tariffs, and will hold public hearings at the start of May.
The UK applies a 2% tax on revenues of certain search engines, social-media platforms and online marketplaces. The tax affects firms with digital-services revenue exceeding 500 million pounds and UK-specific digital-services revenues exceeding 25 million pounds.
The USTR estimates the value of the DST payable by US-based company groups to the UK be about $325 million annually. Potentially affected goods include art supplies, make-up and cosmetics, apparel, boat-swings and other fairground amusements. The USTR’s
public hearing is set for May 4.
Italy’s DST applies to companies that during the previous calendar year generated 750 million euros or more in worldwide revenue, and 5.5 million euros or more in revenue deriving from the provision of digital services in Italy. The USTR estimates the value of the DST payable by US-based firms to Italy at about $140 million annually. Potentially affected goods include caviar, handbags, suits and bowties.
Spain charges a 3% tax on certain digital-services revenue related to online advertising services, online intermediary services, and data-transmission services. Companies with worldwide revenue of 750 million euros or more and 3 million euros in certain digital-services revenues are subject to the DST.

Initial USTR estimates indicate that the value of the DST payable by US-based companies to Spain will be as much as $155 million annually. Potentially affected goods include shrimp and footwear.
India’s DST imposes a 2% tax on revenue of non-resident companies generated from a broad range of digital services offered in the country, including digital-platform services, digital-content sales, digital sales of a company’s own goods, data-related services and software-as-a-service
The value of the DST payable by US companies to India will be up to about $55 million annually. Goods affected include shrimp, blinds, bamboo products, gold jewelry and rattan furniture.
Austria’s DST imposes a 5% tax on gross revenue from digital advertising services provided in the country. It only applies to companies with annual global revenue of 750 million euros or more, and annual revenues from digital advertising services in Austria of 25 million euros or more. The DST payable by US-based companies to Austria will be up to about $45 million annually. Leather goods, fabrics, optical telescopes and microscopes are among the products that could be affected.

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