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The United States is pushing ahead with plans to attack six nations that tax Internet-based businesses with retaliatory tariffs that could total nearly $ 1 billion annually.
Products entering the US, ranging from Austrian grand pianos and British merry-go-rounds to Turkish Kilim rugs and Italian anchovies, could face tariffs of up to 25% annually. documents released by the US Trade Representative Fair The tariffs are in response to countries that are imposing taxes on internationally operating technology companies, such as Amazon.com Inc. and Facebook Inc.
In each of the six cases, the USTR proposes to impose tariffs that would roughly total the amount of tax revenue each country is expected to derive from US companies. The cumulative annual value of the tariffs is $ 880 million, according to calculations by Bloomberg News.
Efforts have been made to replace each individual country’s digital taxes with a global standard, to be negotiated by the Organization for Economic Cooperation and Development, but no agreement has yet been reached.
The United States says it is committed to the OECD process, but will keep its options, including tariffs, in the meantime, USTR Katherine Tai said in a statement on March 26.
Read more: Why ‘digital taxes’ are the new trade war Flash point: QuickTake
The Internet Association, whose Members include Amazon, Facebook and Alphabet Inc.’s Google, which welcomed the USTR’s move.
The USTR’s action “is an important affirmation to roll back these discriminatory trade barriers as the United States continues to work to find a viable solution in the OECD,” the group said in a statement.
The USTR has invited the public to comment on its plans to move forward with the rates and will hold public hearings in early May.
Below is a summary of each country’s tax laws, which assets may be affected, and the date of the USTR virtual hearing.
The United Kingdom
- The UK levies a 2% tax on income from certain search engines, social media platforms and online marketplaces.
- The tax affects companies with digital services revenue in excess of £ 500 million and UK-specific digital service revenue in excess of £ 25 million.
- The USTR estimates that the value of DST payable by US-based groups of companies to the UK is about $ 325 million annually.
- Potentially affected assets include art supplies, makeup and cosmetics, apparel, boat swings and other fairground amusements.
- The USTR’s public hearing is scheduled for May 4.
- The Italian DST applies to companies that during the previous calendar year generated € 750 million or more in global revenue and € 5.5 million or more in revenue from providing digital services in Italy.
- The USTR estimates the value of DST payable by US-based companies to Italy at around $ 140 million annually.
- Products potentially affected include caviar, purses, suits and bow ties.
- The public hearing is scheduled for May 5.
- Spain charges a 3% tax on certain income from digital services related to online advertising services, online intermediation services and data transmission services.
- Companies with worldwide revenues of € 750 million or more and € 3 million in certain digital service revenues are subject to DST.
- Initial USTR estimates indicate that the value of DST payable by US companies to Spain will be up to $ 155 million annually.
- Products potentially affected include shrimp and footwear.
- The public hearing is scheduled for May 6.
- Turkey’s DST applies to companies that during the previous calendar year generated € 750 million or more in global revenue and Lire 20 million or more in revenue from providing digital services in the country.
- US-based companies would pay Turkey about $ 160 million in taxes annually, USTR estimates show.
- Carpets, handwoven rugs, and glazed ceramic tile are among the items that could be affected.
- The public hearing is scheduled for May 7.
- India’s DST imposes a 2% tax on non-resident business income generated from a wide range of digital services offered in the country, including digital platform services, digital content sales, digital sales of goods of a company, data-related services. and software as a service
- The value of DST payable by US companies to India will be until about $ 55 million annually.
- Products affected include shrimp, blinds, bamboo products, gold jewelry, and rattan furniture.
- The public hearing is scheduled for May 10.
- Austria’s DST imposes a 5% tax on gross income from digital advertising services provided in the country. It only applies to companies with global annual revenues of € 750 million or more, and annual digital advertising service revenue in Austria of € 25 million or more.
- The DST payable by US-based companies to Austria will be until about $ 45 million annually.
- Leather goods, fabrics, optical telescopes and microscopes are among the products that could be affected.
- The public hearing is scheduled for May 11.