The new economy: "e-commerce" and the global digital tax issue

As the world of e-commerce continues growing around the world so too is the pressure to collect the revenue that this market generates. We have been reporting the issue of the US implementing section 301 tariffs on goods that originate from a country that discriminates against US digital companies.

The United States Trade Representative (USTR) announced on March 26, 2021 the next steps in its Section 301 investigations of Digital Service Taxes (DSTs) adopted or under consideration by ten US trading partners. In January, USTR found that the DSTs adopted by Austria, India, Italy, Spain, Turkey, and the United Kingdom were subject to action under Section 301and their taxes were inconsistent with principles of international taxation, and burdened US companies. USTR is proceeding with the public notice and comment process on possible trade actions to preserve procedural options before the conclusion of the statutory one-year time period for completing the investigations.

USTR has set up virtual public meetings in April and May to hear and accept rebuttal comments to the potential action. All goods that the US has targeted are listed under each country’s notice and many of the items captured are clothing, food, and other items that are traded with the US.
The USTR is terminating the Section 301 investigations of Digital Services Taxes (DSTs) under consideration by Brazil, the Czech Republic, the European Union, and Indonesia because these jurisdictions either have not adopted or not implemented a DST during the period of investigation.

“The United States is committed to working with its trading partners to resolve its concerns with digital services taxes, and to addressing broader issues of international taxation,” said Ambassador Katherine Tai. “The United States remains committed to reaching an international consensus through the OECD (Organization for Economic Co-operation and Development) process on international tax issues.  However, until such a consensus is reached, we will maintain our options under the Section 301 process, including, if necessary, the imposition of tariffs.”

BDP will continue to monitor the situation and keep you updated on the final determination made by USTR in its investigation. Any questions please feel free to contact me directly.