US Probes Into Digital Services Tax Imposed By Trading Partners Including India

Report By: Nandika Chand | Last Updated June 3, 2020

The United States has launched Section 301 investigations into digital services tax (DST) adopted by trading partners Austria, Brazil, Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey and the United Kingdom.

Myron Brilliant, the US Chamber of Commerce Executive Vice President and Head of International Affairs, said digital commerce is a powerful engine of economic growth and job creation. He pointed out that countries are imposing new digital taxes that are unilateral, discriminatory and burdensome to the economy at a time when growth is needed more than ever. “The world needs a multilateral solution to these challenges, which is why the Chamber supports efforts to address these challenges through multilateral negotiations under the aegis of the OECD,” Brilliant said.

“We urge all parties to double down on those negotiations and avoid unilateral discriminatory taxes.” The chief executive, of the Information Technology Industry Council which includes Amazon, Facebook and Google, Jason Oxman endorsed the investigation and expressed hopes for a negotiated solution.

The Trump administration has also threatened trading partners with tariffs if they fail to comply. Sources said the taxes will impact US digital giants like Amazon. According to the Washington Post, if the digital tax investigation result in new tariffs, it could wreck several ongoing trade negotiations, including with Britain, the EU and India.

Robert Lighthizer, the US trade representative, said Trump is concerned that US’s many trading partners are adopting tax schemes designed to unfairly target their companies. He said the US is prepared to take all appropriate action to defend its businesses and workers against such discrimination.