11/30/2021

U.S. and India Also Reach Agreement on Digital Services Taxes

On November 24, 2021 the Office of the U.S. Trade Representative (USTR) announced that the U.S. and India have now reached an agreement on the treatment of the Digital Services Tax, known as DST.

Similar to the agreements announced on October 21 for the countries of Austria, France, Italy, Spain and the United Kingdom, and on November 22 for Turkey, India will remove its existing DSTs before the entry into force of Pillar 1 of the agreement on global taxation of the Organization for Economic Cooperation and Development (OECD).

The USTR November 24 announcement can be found here.

In return, the United States will terminate its currently suspended additional duties on certain imports from India that had been adopted in the USTR’s Section 301 investigation of India’s DSTs.

The Department of the Treasury’s announcement of this agreement with India is available here.

While the Section 301 investigation into India’s DSTs will soon be terminated, the USTR will begin to monitor implementation of the agreement with India.

The United States has now reached agreement regarding the treatment of DSTs during the transitional period prior to entry into the force of Pillar One of the OECD’s historic agreement on global taxation in all seven of the DST Section 301 investigations.

Please contact your V. Alexander account team with any questions and follow us on our website www.valexander.com for updates on this and other topics.

SECURITY NOTICE: This web post may include hyperlinks to websites outside of our internal control. All hyperlinks in this web post are believed to be legitimate and provided for your convenience, however, we cannot take any responsibility for the safety of outside links. We recommend caution as with any hyperlinks in any web post, and to hover your mouse over the links before clicking to insure the destination is as expected or to visit the sites by going to the main websites for the agencies we reference in your web browser and search for the sites for the mentioned topics from there.

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11/29/2021

US. and Turkey Reach Agreement on Digital Services Taxes

On November 22, 2021 the Office of the U.S. Trade Representative (USTR) announced that the U.S. and Turkey have now reached an agreement on the treatment of the Digital Services Tax, known as DST.

Similar to the agreement announced on October 21 for the countries of Austria, France, Italy, Spain and the United Kingdom, Turkey will remove its existing DSTs before the entry into force of Pillar 1 of the agreement on global taxation of the Organization for Economic Cooperation and Development (OECD).

The USTR stated that it will terminate its currently-suspended duties with respect to Turkey after an agreements under which Turkey will continue to collect DSTs pending full implementation of the recently-concluded OECD agreement (expected in 2023) but will credit them against future taxes accrued under that deal.

A copy of the USTR announcement can be found here.

Please contact your V. Alexander account team with any questions and follow us on our website www.valexander.com for updates on this and other topics.

SECURITY NOTICE: This web post may include hyperlinks to websites outside of our internal control. All hyperlinks in this web post are believed to be legitimate and provided for your convenience, however, we cannot take any responsibility for the safety of outside links. We recommend caution as with any hyperlinks in any web post, and to hover your mouse over the links before clicking to insure the destination is as expected or to visit the sites by going to the main websites for the agencies we reference in your web browser and search for the sites for the mentioned topics from there.

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10/25/2021

Last Thursday, October 21, 2021, the Department of the Treasury announced that the United States has reached an agreement with Austria, France, Italy, Spain and the United Kingdom on the treatment of digital services taxes (DSTs). This agreement comes a little more than a month before the United States was scheduled to implement additional duties of 25 percent on certain imports from each of those countries in response to their DSTs. In our June 3 update, we advised that The Office of the U.S. Trade Representative (USTR) explained that the DSTs adopted by these countries “discriminate against U.S. companies, are inconsistent with prevailing principles of international taxation, and will burden U.S. companies.”

According to the joint statement released last Thursday, on October 8, 2021, the United States, Austria, France, Italy, Spain and the United Kingdom joined 130 other members of the OECD/G20 Inclusive Framework in reaching an agreement on the Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy and on reforming the international tax system. As a result of the agreement, the United States, Austria, France, Italy, Spain and the United Kingdom, the countries have agreed as part of Pillar 1 to withdraw all unilateral measures (DSTs) on all companies and to refrain from imposing new unilateral tax measures. As a result, any liability for DSTs that U.S. companies accrue during the interim period will be creditable against future income taxes accrued under Pillar 1 under the OECD agreement. (Pillar 1 of the OECD agreement is to be fully implemented in 2023.) In return, the United States will terminate the currently-suspended additional 25% duties on certain imports from Austria, France, Italy, Spain and the United Kingdom that had been adopted in the USTR’s DSTs Section 301 investigations. The USTR will formally terminate these trade actions and, in coordination with the Department of the Treasury, will monitor implementation of the agreement going forward.

The joint statement describes a political compromise reached among the United States, Austria, France, Italy, Spain, and the United Kingdom, on a transitional approach to existing Unilateral Measures while implementing Pillar 1 (hereinafter, the “Unilateral Measures Compromise”). Under the Unilateral Measures Compromise, Austria, France, Italy, Spain, and the United Kingdom, countries which have all enacted Unilateral Measures before October 8, 2021, are not required to withdraw their Unilateral Measures until Pillar 1 takes effect. However, to the extent that taxes that accrue to Austria, France, Italy, Spain, and the United Kingdom with respect to existing Unilateral Measures during a defined period after political agreement is reached, and before Pillar 1 takes effect, exceed an amount equivalent to the tax due under Pillar 1 in the first full year of Pillar 1 implementation (prorated to achieve proportionality with the length of the Interim Period), such excess will be creditable against the portion of the corporate income tax liability associated with Amount A as computed under Pillar 1 in these countries, respectively. As part of the Unilateral Measures Compromise, the United States agrees to terminate proposed trade actions and commit not to impose further trade actions against Austria, France, Italy, Spain, and the United Kingdom with respect to their existing Digital Services Taxes until the end of the Interim Period. The United States, Austria, France, Italy, Spain, and the United Kingdom, will remain in close contact to ensure that there is a common understanding of the respective commitments under this agreement and endeavor to resolve any further differences of views on this matter through constructive dialogue.

V. Alexander will continue to monitor this issue and provide updates as needed.

Please contact your V. Alexander account team with any questions and follow us on our website www.valexander.com for updates on this and other topics.

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06/03/2021

USTR Suspends Additional Section 301 Tariffs For 6 Countries in the Digital Services Tax (DST) Investigation

The Office of the United Sates Trade Representative (USTR) has concluded their year-long investigation into U.S. concerns about the DST and has determined that DST’s adopted by Austria, India, Italy, Spain, Turkey, and the United Kingdom have discriminated against U.S. digital companies, are inconsistent with principles of international taxation, and will burden U.S. companies. As a result, the USTR has determined to impose additional 25 percent on $2.1 billion worth of certain goods from these 6 countries.

However, The USTR announced it is immediately suspending the tariffs for up to 180 days to provide additional time to complete the ongoing multilateral negotiations on international taxation at the Organization for Economic Cooperation and Development (OECD) and in the G20 processes. This action will 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” said Ambassador Katherine Tai. The complete text of the notice can be found here.

If you import goods from any of these 6 countries you may want to review the products that could be subject to these additional duties. Links to each of the countries and products can be found below:

Notice of Action in the Section 301 Investigation of Austria’s Digital Services Tax – June 2, 2021
Notice of Action in the Section 301 Investigation of India’s Digital Services Tax – June 2, 2021
Notice of Action in the Section 301 Investigation of Italy’s Digital Services Tax – June 2, 2021
Notice of Action in the Section 301 Investigation of Spain’s Digital Services Tax – June 2, 2021
Notice of Action in the Section 301 Investigation of Turkey’s Digital Services Tax – June 2, 2021
Notice of Action in the Section 301 Investigation of the United Kingdom’s Digital Services Tax – June 2, 2021

V. Alexander will continue to monitor this situation and provide updates accordingly.

Please contact your V. Alexander account team with any questions and follow us on our website www.valexander.com for updates on this and other topics.

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04/07/21

USTR Considers Additional Tariffs on Goods From Six Countries to Offset the DST

The Office of the United States Trade Representative (USTR) is considering an additional 25% tariff on certain goods from Austria, India, Italy, Spain, Turkey, and the United Kingdom in response to the Digital Services Tax (DST) recently imposed by these six countries.

The U.S. government believes that the DST unfairly discriminate against U.S. companies in the digital space (e.g., Google, Facebook, Netflix, et al.), are inconsistent with principles of international taxation, and disproportionately burden American companies.

Targeted products include the following:

Austria — Leather articles, textile products, ceramic articles, stemware, glassware, glass fibers, copper alloys, printed circuit assemblies, and various instruments;
India — Seafood, rice, bamboo articles, corks, cigarette paper, wool yarn, bras, pearls, precious stones, precious metal articles, and furniture;
Italy — Seafood, perfumery, travel and leather goods, apparel, footwear, spectacle lenses, and optical elements;
Spain — Seafood, handbags, belts, footwear, hats, and glassware;
Turkey — Textile floor coverings, bed linen, curtains, stone/ceramic articles, precious metal articles, and imitation jewelry;
United Kingdom — Personal care/cosmetic products, apparel, footwear, ceramic articles, precious metal articles, imitation jewelry, refrigeration equipment, industrial robots, furniture, and games.

Interested parties can comment up until April 30, 2021, and comments must be submitted via the USTR’s electronic comments portal and should be placed under the appropriate docket number for each country.

Please contact your V. Alexander account team with any questions and follow us on our website www.valexander.com for updates on this and other topics.

SECURITY NOTICE: This web post may include hyperlinks to websites outside of our internal control. All hyperlinks in this web post are believed to be legitimate and provided for your convenience, however, we cannot take any responsibility for the safety of outside links. We recommend caution as with any hyperlinks in any web post, and to hover your mouse over the links before clicking to insure the destination is as expected or to visit the sites by going to the main websites for the agencies we reference in your web browser and search for the sites for the mentioned topics from there.