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 companies.

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 consideration.

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 administration.

"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 yuka.hayashi@wsj.com and Paul Hannon at paul.hannon@wsj.com

 

(END) Dow Jones Newswires

June 02, 2021 12:15 ET (16:15 GMT)

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