U.S. to Levy Tariffs Over Digital-Service Tax, but Suspend Implementation--2nd Update
By Yuka Hayashi and Paul Hannon
WASHINGTON -- The U.S. said Wednesday it will impose tariffs on
the U.K. and five other countries in response to their taxes on
U.S. technology companies -- but will suspend the levies for six
months to negotiate an international resolution.
U.S. trade representative Katherine Tai said investigations
determined that tariffs were justified because of digital services
taxes imposed on U.S. companies by the U.K., Austria, India, Italy,
Spain and Turkey.
But she said the tariffs would be suspended while the U.S.
focuses on finding "a multilateral solution to a range of key
issues related to international taxation."
She said the U.S. is looking to resolve the issue through Group
of 20 economic powers and other international groups.
The digital services taxes affect companies such as Alphabet
Inc.'s Google and Facebook Inc.
The proposed U.S. tariffs of 25% would target imports worth
nearly $2 billion from the six countries, including imports worth
over $800 million from the U.K. and more than $300 million each
from Italy and Spain.
Following investigations initiated against 10 countries in June
2020, the USTR under the Trump administration determined in January
that the tax policies of the six countries discriminated against
U.S. digital companies and that they were "inconsistent" with the
principles of international taxation.
A USTR official said the latest decision was driven by the
deadline imposed by the terms of the original investigations and
that it was "not an escalatory action."
The negotiations to find a global solution to technology taxes
at OECD and G-20 are moving quickly, the USTR official said during
a media briefing, adding, "We are hoping to see these issues
resolved within the next 180 days"
Separately, the U.S. in March suspended plans to impose tariffs
on French luxury goods in response to its tax on technology
The U.S. has terminated its investigations into the policies of
Brazil, the Czech Republic, the European Union and Indonesia
because they had not implemented the digital taxes under
The hope that an agreement can be secured this year is widely
shared. Speaking Tuesday as he started a five-year term as
secretary-general of the OECD, Mathias Cormann said he was "quietly
optimistic," in part because of the Biden administration's fresh
commitment to the talks, which had stalled under the previous
"The approach taken by the Biden administration has been a game
changer, " Mr. Cormann told reporters. "I very much welcome, and I
know that overwhelmingly members welcome, the very positive and
constructive engagement of the United States designed to facilitate
a consensus in the not too distant future."
The negotiations will continue in London when treasury chiefs
from the Group of Seven industrialized nations, including Janet
Yellen, meet Friday and Saturday. If they agree to adopt a common
stance on the tax overhaul, it will increase the likelihood of an
accord at a meeting of treasury chiefs from the Group of 20 leading
economies in Venice on July 9 and 10.
Write to Yuka Hayashi at email@example.com and Paul Hannon at
(END) Dow Jones Newswires
June 02, 2021 12:15 ET (16:15 GMT)
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