USTR announces suspended tariffs on six nations after probes into digital taxes

United States Trade Representative Katherine Tai on Wednesday announced tariffs on goods from six countries in light of their digital services taxes (DSTs), but said that the tariffs would be suspended for up to 180 days to keep negotiations going.

Last year, the Office of the U.S. Trade Representative (USTR) launched investigations into proposed or adopted DSTs in 10 jurisdictions. In January, USTR determined that taxes adopted by six nations — Austria, India, Italy, Spain, Turkey and the United Kingdom — were discriminatory against U.S. companies.

“The United States is focused on finding a multilateral solution to a range of key issues related to international taxation, including our concerns with digital services taxes,” Tai said in a statement.

“Today’s actions provide time for those negotiations to continue to make progress while maintaining the option of imposing tariffs under Section 301 if warranted in the future,” she added.

The other four jurisdictions that USTR had initially investigated —  Brazil, the Czech Republic, the European Union and Indonesia — had not implemented the DSTs they were considering, and USTR terminated those investigations earlier this year.

Countries have been eyeing DSTs in recent years in order to collect revenue from large technology corporations — such as Google, Facebook and Amazon — that have many users in their jurisdictions but pay little in taxes there.

The U.K.’s tax, for example, takes 2 percent of revenues for search engines, social media platforms and online marketplaces for companies that take in a certain amount of revenue from those sources.

The tech giants and U.S. policymakers on both sides of the aisle have criticized the taxes, arguing that they unfairly target major American firms.

The Group of 20 (G-20) and the Organization for Economic Cooperation and Development (OECD), two groups of industrial countries, are working to reach an agreement on international tax issues, including those related to DSTs. The G-20 is hoping to reach a political agreement in July.

Sen. Mike Crapo (Idaho), the top Republican on the Senate Finance Committee, said last week that the U.S. should not support a multilateral agreement unless a condition is that countries repeal their unilateral DSTs.

—Niv Elis contributed.