USTR slams India, Italy, Turkey on digital taxes but holds off on tariffs

WASHINGTON: Digital services taxes adopted by India, Italy and Turkey discriminate against U.S. companies and are inconsistent with international tax principles, the U.S. Trade Representative’s office said on Wednesday, paving the way for potential retaliatory tariffs. USTR, releasing the findings of its “Section 301” investigations into the digital taxes, said it was not taking specific actions at this time, but “will continue to evaluate all available options.”

The probes are among several still open USTR Section 301 investigations that could lead to tariffs before President Donald Trump leaves office or early in the administration of President-elect Joe Biden. Among these is a more advanced probe into France’s digital services tax.

USTR had set a Jan. 6 deadline for implementing 25% tariffs on French cosmetics, handbags and other imports valued at around $1.3 billion annually in retaliation against the French digital taxes.

But it was unclear late on Wednesday whether collections of those duties would begin as scheduled. Spokesmen for USTR and Customs and Border Protection, the agency responsible for tariff collections, did not respond to multiple requests for comment. USTR has concluded the digital taxes imposed by France, India, Italy and Turkey discriminate against big U.S. tech firms, such as Google, Facebook, Apple and Amazon.com

In the latest report, it also said the Indian, Italian and Turkish taxes were “unreasonable” because they are “inconsistent with principles of international taxation, including due to its application to revenue rather than income, extraterritorial application, and failure to provide tax certainty.”