The U.S. has delayed through June 30 the threat of additional tariffs on hundreds of millions of dollars’ worth of imports from Turkey in a dispute over digital services taxes. The U.S. recently took similar action with respect to imports from Austria, France, Italy, Spain, and the United Kingdom.
DSTs are taxes on revenues generated from providing digital services to, or aimed at, users in the subject jurisdiction. In June 2020 the Office of the U.S. Trade Representative launched a Section 301 investigation into whether DSTs adopted or under consideration by Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey, and the UK would discriminate against U.S. companies, be inconsistent with prevailing principles of international taxation, and burden or restrict U.S. commerce.
USTR concluded that DSTs in Austria, France, India, Italy, Spain, Turkey, and the UK would meet these criteria and proposed additional tariffs of up to 25 percent on imports from these countries. USTR subsequently announced political compromises under which such tariffs would be suspended through Dec. 31, 2023, to give the Organization for Economic Cooperation and Development time to conclude a multilateral agreement on DSTs. (The investigations of Brazil, the Czech Republic, the EU, and Indonesia were terminated after USTR concluded that they had not adopted or implemented DSTs at that time.)
However, the OECD talks are still ongoing, with the organization recently calling for participants to finalize an agreement by the end of March 2024 and sign it by the end of June. The U.S. and Turkey have therefore extended their political compromise through June 30. It is unclear if any such action is forthcoming with respect to India.
For more information on these developments, please contact Nicole Bivens Collinson (at (202) 730-4956 or via email) or Kristen Smith (at (202) 730-4965 or via email).
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