Background

A tariff increase on imports from France that was to have taken effect Jan. 6 in light of that country’s digital services tax has been suspended until further notice. In addition, no tariff increases are being imposed on goods from India, Italy, and Turkey after investigations of DSTs in those countries.

In 2019 France approved a three percent tax on total annual revenues generated by some companies from providing certain digital interface services (e.g., e-marketplaces for goods and services) and Internet advertising services to, or aimed at, French users. The Office of the U.S. Trade Representative determined that this DST is unreasonable or discriminatory and burdens or restricts U.S. commerce. In response, USTR announced plans to impose a 25 percent additional tariff on 21 tariff subheadings, covering soap, cosmetics, and handbags, when imported from France.

In June 2020 USTR launched similar investigations of DSTs adopted or under consideration by Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey, and the United Kingdom.

Although the tariff increase on France was set to take place Jan. 6, USTR states that this action has been suspended indefinitely “to promote a coordinated response” with the other DST investigations, which “have not yet reached a determination on possible trade actions.”

USTR did announce Jan. 6 its conclusion that DSTs adopted by India, Italy, and Turkey discriminate against U.S. companies, are inconsistent with prevailing principles of international taxation, and burden or restrict U.S. commerce. However, USTR said it is “not taking any specific actions in connection with the findings at this time.” The status of the other investigations is expected to be announced “in the near future.”

For more information, please contact Nicole Bivens Collinson or Kristen Smith.

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