USTR Criticize India on Digital Taxes; Yet Holds on Tariffs

The U.S. Trade Representative’s office has stated that the Digital services taxes being adopted by India, Italy, and Turkey discriminate against U.S. companies and are inconsistent with the international tax principles. This has paved the way for potential retaliatory tariffs.

USTR, releasing the findings of its "Section 301" investigations into the digital taxes, said it was not taking specific actions at this time, but "will continue to evaluate all available options."

However, USTR had set a deadline until January 6 for implementing 25 percent tariffs on handbags, French cosmetics, and other imports that are valued at approximately $1.3 billion annually in retaliation against the French digital taxes.

The probes are among several still open USTR Section 301 investigations that could lead to tariffs before President Donald Trump leaves office or early in the administration of President-elect Joe Biden. Among these is a more advanced probe into France's digital services tax.

Although it was unclear until Wednesday whether collections of those duties would begin as scheduled. Agents for USTR and Customs and Border Protection, the agency accountable for tariff collections, has not responded even to multiple requests for comment.

USTR has concluded the digital taxes imposed by France, India, Italy, and Turkey discriminate against big U.S. tech firms, such as Google, Facebook, Apple and Amazon.com

In the latest report, it also said the Indian, Italian and Turkish taxes were "unreasonable" because they are "inconsistent with principles of international taxation, including due to its application to revenue rather than income, extraterritorial application, and failure to provide tax certainty."