US slaps tariffs on countries that hit Big Tech with digital services taxes ... then pauses them immediately
- Reference: 1622699890
- News link: https://www.theregister.co.uk/2021/06/03/us_digital_services_tax_tarrifs/
- Source link:
The office announced the tariffs and a 180-day suspension of them in the same breath, with the suspension designed to provide time for negotiations to complete between G20 nations and the Organisation for Economic Co-operation and Development (OECD). These groups are right now hammering out a harmonized global digital services tax (DST) after various nations devised their own DSTs and ruffled feathers considerably.
The USTR's [1]announcement followed a year-long investigation of DSTs. That probe concluded, according to the USTR's [2]initiation notice [PDF] for the tariffs, that DSTs “diverge from norms reflected in the US tax system and the international tax system.”
[3]
Crucially, the USTR says DSTs penalize tech companies for succeeding.
[4]
[5]
US Trade Rep Katherine Tai tweeted:
We want to resolve the issues around digital services taxes multilaterally at the [6]@OECD & [7]#G20 . The suspension of tariffs for 180 days after our investigation reflects [8]@USTreasury ’s good progress towards consensus and creates space for those talks to continue. [9]https://t.co/oQg7lrHY6V — Ambassador Katherine Tai (@AmbassadorTai) [10]June 2, 2021
The investigation deemed Austria, India, Italy, Spain, Turkey, and the United Kingdom's DSTs discriminated against American tech outfits. The US believes the six nations extract US$880m in digi-tax from American companies every year.
Investigations regarding Brazil, the Czech Republic, the EU, and Indonesia are still ongoing.
[11]Spotlight on Apple, Google app stores: What happened to Tile, Spotify, Match – and that proposed law in Arizona
[12]Big tech suggests Vietnam rewrite its digital tax plans
[13]Philippines floats digital services tax – and Uber’s local arm surprisingly applauds
[14]Indonesia imposes 10% digital services tax
The USTR report on [15]India’s DST [PDF] revealed that of the 119 companies liable for the tax in India, 72 per cent are American. India charges two per cent tax on revenue generated in e-commerce services provided by foreign companies.
The OECD is hosting ongoing DST negotiations with 140 governments, and G20 ministers hope to have a worldwide solution to DSTs next month. G7 finance ministers are meeting this week in London, and are expected to support President Biden’s call for a new minimum tax to curtail clever corporate tax dodging.
If the US gets its way, a single international tax code would curb disproportionate taxes and arbitrary levies on the likes of America’s Google, Facebook, and Apple. ®
Get our [16]Tech Resources
[1] https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/june/ustr-announces-and-immediately-suspends-tariffs-section-301-digital-services-taxes-investigations
[2] https://ustr.gov/sites/default/files/enforcement/301Investigations/DST_Initiation_Notice_June_2020.pdf
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YLioPqOkA3MwmfkS5xl1WwAAAA8&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YLioPqOkA3MwmfkS5xl1WwAAAA8&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YLioPqOkA3MwmfkS5xl1WwAAAA8&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[6] https://twitter.com/OECD?ref_src=twsrc%5Etfw
[7] https://twitter.com/hashtag/G20?src=hash&ref_src=twsrc%5Etfw
[8] https://twitter.com/USTreasury?ref_src=twsrc%5Etfw
[9] https://t.co/oQg7lrHY6V
[10] https://twitter.com/AmbassadorTai/status/1400188829290713094?ref_src=twsrc%5Etfw
[11] https://www.theregister.com/2021/04/25/antitrust_app_store_analysis/
[12] https://www.theregister.com/2021/03/30/vietnam_draft_circular_ecommerce_tax/
[13] https://www.theregister.com/2020/05/20/philippines_digital_services_tax/
[14] https://www.theregister.com/2020/05/18/indonesia_digital_services_tax/
[15] https://ustr.gov/sites/default/files/enforcement/301Investigations/Report%20on%20India%E2%80%99s%20Digital%20Services%20Tax.pdf
[16] https://whitepapers.theregister.com/
Re: About bl**dy time
If Company G generates revenue in country X
If it generates profit in country X, it should pay tax in country X. Paying tax on revenue does not make sense, it's a bodge to get around the fact that tax codes are stupidly complex. The fix is to simplify them, not to add yet more bodges on top of bodges. That just creates even more loopholes for tax lawyers to exploit.
Re: About bl**dy time
"If it generates profit in country X, it should pay tax in country X"
Generates profit or declares profit? There's the rub. International companies have been running rings around the taxman long before the internet existed. The classic was the cost of spare parts sold across borders within the same company. Called transfer pricing IIRC.
Another classic is when companies are acquired and the price of the Goodwill element, followed by tax writedowns on virtual losses by overpaying for it.
The taxman isn't an engineer, an IT expert or an economist. I don't know what the answer is but maybe taxation on corporations should reflect a proportion of 'value extracted' with a sort of economic judiciary to decide how much that is.
Have to consider the fact that part of the issue is that corporations like customers in rich well educated populaces with good infrastructure and healthcare, while wanting to pay for cheap labour and low corporation tax in countries where less of those things exist. A bit more lateral thinking is needed if were going to get away from the 'Double Dutch'.
Sauce for the goose
So the Uncle Sam approves of Silicon Valley "disrupters" screwing local industries and then objects when the communities seek to recover some of the value being ripped out of the local economies.
If DSTs adversely affect US companies, it is a sign of how well US companies are doing in those places. Get over it.
Backdoor protectionism
If the US companies generating profit in country X pay their taxes in country X, then Uncle Sam cannot tax them again in the US. This is reducing the taxes the US Government is getting from US companies operating elsewhere. Threatening us with tariffs is Protection Racket tactics but they have to realise that the gravy train days are over.
Re: Backdoor protectionism
If the US companies generating profit in country X pay their taxes in country X, then Uncle Sam cannot tax them again in the US.
I think you may be mistaken there. The US can, and does, tax its people wherever the hell it wants to.
Re: Backdoor protectionism
It does, but not on earnings that have already been taxed to the same level or greater than the US would. This is why, Bojo was on the hook for paying US taxes when he sold his house a few years back. The UK doesn't charge capital gains on primary residence sales, while the US does, therefore it was untaxed as far as they were concerned. At the same time his income is already taxed in the UK so they don't go after that.
I'll BITE. I've BITTEN. Oh alright I'll bark.
About bl**dy time
G7 Finance ministers are meeting this week in London and are expected to support US President Biden’s call for a new minimum tax to curtail clever corporate tax dodging.
If Company G generates revenue in country X, then it should pay tax where it's generated, not 'offshored' to tax haven Y. It's not being disproportionate against US tech companies when it's those companies doing what their creative accountants are telling them to do, ie: tax dodging..