The United States will soon release the results of investigations into Austria, Italy and India’s decisions to tax the local income of internet companies like Facebook Inc., which could pave the way for retaliatory fees, people familiar with the report said. situation.
The determinations on the three countries are due because all of them have instituted so-called digital services taxes, or local sales levies from companies like Alphabet Inc.’s Google, this year, the people who could not be identified said. because the information is private. There may also be findings from Indonesia, the UK and Turkey, one of the people said.
The United States Trade Representative launched investigations into the movements of at least 10 countries in June, citing Section 301 of the United States Trade Act of 1974, which allows him to retaliate for trade practices he considers unfair. It is the same tool that is used to justify US tariffs on Chinese products for alleged theft of intellectual property.
In addition to the three countries where determinations will soon be made, the others are Brazil, the Czech Republic, Indonesia, Spain, Turkey, the United Kingdom and the European Union bloc.
Spain and the Czech Republic will begin to collect the tax on digital services in January.
A spokesman for the US Trade Representative Robert Lighthizer did not immediately respond to a request for comment.
Last year, the USTR announced levies on $ 2.4 billion of French wines, cheeses and other products as a result of France’s digital tax. And France agreed to delay both the tariffs and the collection of the tax until the end of 2020, but both could go into effect next year without an agreement to extend the truce.
Plans for an international digital tax deal brokered by the Organization for Economic Cooperation and Development have been delayed until at least the summer of 2021 after it became clear that the initial deadline for reaching a deal this year would not be met. The goal had been to replace each country’s digital taxes with a global plan, but it’s unclear how quickly a deal can be reached.
Pressing Forward
Without an OECD deal, countries are moving forward with implementing their own versions of the taxes, which could result in a retaliatory global tax and tariff war between the US and countries that want one. part of the income taxes of the American tech giants. Belgium, Norway and Latvia are among the countries that could introduce taxes on digital services next year.
It is unclear how the incoming Biden administration will deal with the dispute and whether it will give more credit to the OECD process than the Trump team. Still, in the absence of a comprehensive tax deal, there is bipartisan support on Capitol Hill to respond to unilateral actions targeting American businesses.
The United Nations is also trying to find a solution by updating its model tax treaty with language on digital taxes. However, critics of the plan say it may not be broad enough in scope and that a multilateral agreement is still needed.
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