According to the US Trade Representative’s office, the US government announced new, suspended tariffs against six countries on Wednesday in response to their governments’ digital services taxes.
Austria, India, Italy, Spain, Turkey, and the United Kingdom are among the six countries hit by the tariffs, which are set at 25% on about $2 billion in goods. The additional tariffs will be delayed for up to 180 days while the US negotiates a proposed global tax regime through the Organization for Economic Cooperation and Development and the G20 process, according to the US Trade Representative.
Large tech companies like Apple, Facebook, and Google have long complained to foreign governments that they should pay more taxes. Some countries, including the United States, have recently enacted taxes aimed specifically at the revenue generated by such companies, including Facebook, Google, and Amazon.
For example, the United Kingdom has imposed a 2% tax on the revenues of social media platforms, search engines, and online marketplaces, claiming that because these companies profit from UK-based users, the UK is entitled to a share of those profits.
“The application of the current corporate tax rules to businesses operating in the digital economy has led to a misalignment between the place where profits are taxed and the place where value is created,” the UK government has said.
The United States’ reaction to the digital services taxes reflects its opposition to what it sees as discriminatory policies that target large, successful Silicon Valley firms with global reach. In March, the US Trade Representative proposed a total of $880 million in new tariffs against the six countries, as part of an investigation into foreign taxes under Section 301 of the 1974 Trade Act.
Imported products such as shrimp, carpets, cosmetics, clothing, and video game consoles are among the items covered by the final tariff figure, which affects more than $2 billion in goods.
“The United States remains committed to reaching a consensus on international tax issues through the OECD and G20 processes,” said US Trade Representative Katherine Tai in a statement. “Today’s actions 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.”
