December 6, 2021

Volume XI, Number 340

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December 06, 2021

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December 03, 2021

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USTR Proposes Retaliatory Tariffs on Digital Services Taxes: Austria, India, Italy, Spain, Turkey, and the United Kingdom

On March 26, 2021, the United States Trade Representative (USTR) Katherine Tai announced that the United States is considering implementing up to 25% retaliatory tariffs on certain products of Austria, India, Italy, Spain, Turkey, and the United Kingdom for the Digital Services Taxes (DSTs) adopted or under consideration by those countries. If implemented, the retaliatory tariffs would be in addition to the general tariffs on imported products.

Numerous countries have either proposed or implemented a DST, which is a tax on gross revenues of “non-resident” companies from digital advertising services, platform services, content sales, sales of a company’s own goods, data-related services, software-as-a-service, and several other categories of digital services.

After an investigation initiated under the Trump administration, USTR found that the DSTs were subject to action under Section 301 of the Trade Act of 1974 because they discriminated against U.S. digital companies, were inconsistent with principles of international taxation, and burdened U.S. companies. USTR has acted at this time not because any decision has been made to impose additional Section 301 duties on goods from these six countries, but to keep this option available given statutory timeframes.

Tariffs are proposed on the following countries/products:

Austria
  • Stemware and drinking glasses
  • Copper
  • Circuit assemblies
  • Grand pianos
India
  • Jewelry
  • Shrimp
  • Furniture
Italy
  • Handbags
  • Gloves
  • Suits
  • Ties
  • Footwear
  • Caviar
Spain
  • Footwear
  • Handbags
  • Hats
  • Glassware
  • Shrimp
Turkey
  • Rugs
  • Carpets
  • Ceramic tile
  • Jewelry
United Kingdom
  • Furniture
  • Cosmetics
  • Shampoo
  • Toys

USTR has also announced the public notice and comment process: Requests to appear at a hearing are due April 21; comments are due April 30; a multi-jurisdiction hearing will be held on May 3; and each country will have a separate hearing as well.

USTR has terminated its investigations into the DSTs of Brazil, the Czech Republic, the EU, and Indonesia, since these countries have not adopted or implemented the DSTs under consideration when the investigations were initiated. If any of these jurisdictions proceeds to adopt or implement a DST, USTR may initiate new investigations.

According to USTR Tai, “The United States is committed to working with its trading partners to resolve its concerns with digital services taxes…. However, until such a consensus is reached, we will maintain our options under the Section 301 process, including, if necessary, the imposition of tariffs.”

©2021 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume XI, Number 95
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About this Author

Erik de Bie, Greenberg Traurig Law Firm, Amsterdam, Corporate and Tax Law Attorney
Shareholder

Erik de Bie is an attorney-at-law specilized in international trade, customs and VAT matters. Erik counsels clients in European trade, export control, sanctions, customs, VAT and excise duty related matters, including litigation. He focuses his practice on developing and implementing European savings programs, setting up and restructuring European distribution and supply chains, improving and structuring customs, excise duty and VAT related compliance, and limiting risks and liabilities. Given the developments in European legislation and the needs of his clients, Erik is...

31-020301-7315
Laura Siegel Rabinowitz Corporate Trade Attorney Greenberg Traurig Law Firm
Shareholder

Laura Siegel Rabinowitz counsels domestic and multinational businesses on complex supply chain issues and other complicated challenges associated with trade, advising on mitigation of duty exposure and compliance. Laura has deep experience handling international trade projects for clients, including multinational importers, exporters, manufacturers, retailers, customs brokers, and freight forwarders.

Laura advises clients on mitigating tariffs on Chinese-made products and steel and aluminum and helps clients navigate the maze of regulations,...

212-801-9201
Donald Stein, Greenberg Traurig Law Firm, International Trade and Healthcare Litigation Attorney
Shareholder

Donald S. Stein focuses his practice on federal regulatory issues, and in particular U.S. Customs law, trade remedies and trade policy issues. From dealing with imports and the myriad of laws enforced by the U.S. Bureau of Customs and Border Protection ("CBP"), he has also developed experience in practicing before other federal regulatory agencies, including the U.S. Food and Drug Administration, the U.S. Federal Trade Commission, and the U.S. Fish and Wildlife Service. He is also experienced in working with the U.S. International Trade Commission, the U.S. Department of...

202-530-8502
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