USTR
Vows 100%
Tariffs Over
France’s Digital Services
Tax
December
3, 2019
The U.S. Trade Representative has completed
the first segment of its investigation under
section 301 of the Trade Act of 1974 and
concluded that France’s Digital Services Tax
(DST) discriminates against U.S. companies,
is inconsistent with prevailing principles
of international tax policy, and is
unusually burdensome for affected U.S.
companies. Specifically, USTR’s
investigation found that the French DST
discriminates against U.S. digital
companies, such as Google, Apple, Facebook,
and Amazon. In addition, the French DST is
inconsistent with prevailing tax principles
on account of its retroactivity, its
application to revenue rather than income,
its extraterritorial application, and its
purpose of penalizing particular U.S.
technology companies.
A report
available on USTR’s website sets out the
findings of the investigation.
“USTR’s decision today sends a clear
signal that the United States will take
action against digital tax regimes that
discriminate or otherwise impose undue
burdens on U.S. companies,”
Ambassador Robert Lighthizer said.
“Indeed, USTR is exploring whether to open
Section 301 investigations into the digital
services taxes of Austria, Italy, and
Turkey. The USTR is focused on countering
the growing protectionism of EU member
states, which unfairly targets U.S.
companies, whether through digital services
taxes or other efforts that target leading
U.S. digital services companies.”
USTR
is issuing a
Federal Register notice
explaining that, for the reasons set forth
in the report, the French DST is
unreasonable, discriminatory, and burdens
U.S. commerce. The notice solicits comments
from the public on USTR’s proposed action,
which includes additional duties of up to
100 percent on certain French products. The
notice also seeks comment on the option of
imposing fees or restrictions on French
services. The list of French products
subject to potential duties includes 63
tariff subheadings with an approximate trade
value of $2.4 billion. The value of any
U.S. action through either duties or fees
may take into account the level of harm to
the U.S. economy resulting from the DST.
USTR invites public comment on these
issues. To be assured of consideration,
comments on the proposed action must be
submitted by January 6, 2020 and
post-hearing rebuttal comments by January
14, 2020. Additionally, the Section 301
committee will hold a public hearing
beginning at 9:30 AM on January 7, 2020
regarding proposed action to be taken in
this investigation. The hearing will take
place in the U.S. International Trade
Commission, 500 E Street SW, Washington, DC
20436. USTR expects to proceed expeditiously
thereafter.
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