Virendra Pandit
New Delhi: America is mulling imposition of tariffs on goods imported from India and five other countries in retaliation for their digital services taxes, media reported on Saturday.
U.S. Trade Representative Katherine Tai on Friday said Austria, Britain, India, Italy, Spain, and Turkey have imposed digital services tax. The US is mulling to impose tariffs in retaliation to digital taxes which have affected American companies.
In a statement, Tai said steps would be taken to impose potential tariffs, including filing public notices and collecting public comments as part of investigations launched originally by the Trump administration into the taxes aimed largely at American internet companies and e-commerce platforms.
India introduced a digital services tax in April 2020 which applies only to non-resident companies whose annual revenues are more than Rs. Two crores, and covers online sales of goods and services to Indians. Foreign companies not paying any tax in India will have to pay a two percent equalization levy. To start with, the new levy applied to e-commerce giants Amazon and Flipkart.
Other five countries also introduced similar taxes, targeting in-country revenues of foreign-based digital services platforms, such as Facebook, Google, and Amazon.
The Office of the United States Trade Representative (USTR) has now announced the decision to levy tariffs on these countries despite President Joe Biden’s renewed commitments to pursue a global agreement on digital services taxes through the Organization for Economic Cooperation and Development (OECD).
The US is committed to reaching an international consensus through the OECD 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,” she added.
Tai said that the USTR was also terminating tariff investigations, for now, against Brazil, the Czech Republic, the European Union, and Indonesia because these nations have not implemented digital services taxes they were considering.
The United States also is maintaining a more advanced tariff threat against $1.3 billion in imports of French Champagne, cosmetics, handbags, and other goods in retaliation for France’s digital tax.
Like the French tax, the USTR investigations into the taxes adopted by Austria, Britain, India, Italy, Spain, and Turkey found that they discriminate against U.S. technology companies and are inconsistent with international tax norms, media reported.