Controversy over digital taxes: USA threatens retaliatory tariffs

Wednesday, June 2, 2021

Controversy over digital tax
US threatens to impose retaliatory tariffs

The fact that American Internet companies do business around the world but hardly pay taxes in most countries is a thorn in the side of many countries. That’s why some states have introduced special digital taxes. In turn, this is a thorn in the side of the US government.

The US government is increasing pressure on Great Britain and five other countries in an ongoing dispute over a digital tax for US tech companies such as Alphabet, Amazon and Facebook. US Trade Representative Catherine Tai announced retaliatory tariffs of 25 percent on goods worth more than $2 billion. However, he should be initially suspended for six months in order to find a solution through international negotiations during this period.

The United States is threatening Great Britain and India as well as Austria, Italy, Spain and Turkey with high import barriers on some of their export goods. Notably, if no agreement is reached, an additional fee of 25 per cent should be levied each. For example, in the case of Great Britain, it is about clothing, jewelry and cosmetics. Based on 2019 calendar year import data, the US government has pegged the affected goods here at about $887 million.

Italy is at risk of high tariffs on perfumes, handbags and ties, the volume here is about $386 million. Spain will face significantly higher export barriers for goods worth $324 million, with Turkey at 310 million, India and Austria at 118 and 65 million respectively.

According to Tai, the US hopes to be able to resolve digital tax disputes with the help of the OECD and the G20. In March, the Office of the Trade Representative ended an investigation into possible discrimination against US companies by the European Union, Brazil, Indonesia and the Czech Republic, so that there was no longer any risk of increased tariffs.

There is still a dispute with France. Here the United States had already announced punitive tariffs on about $1.3 billion worth of products, but these were initially suspended in hopes of a coordinated international solution.