USTR Initiates Section 301 Digital Services Tax Investigations on EU, India and Others



Thompson Hine|

The Office of the United States Trade Representative has announced it will begin investigations under Section 301 of the 1974 Trade Act into digital services taxes that have been adopted or are being considered by Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey, and the United Kingdom. According to the Federal Register notice, it is accepting public comments until July 15, 2020.

Digital services taxes (DSTs) are taxes on revenue that certain companies generate from providing covered digital services to, or aimed at, users in that particular jurisdiction. For example, DSTs may impact multinational businesses providing online advertising services, selling consumer data, or running online intermediary platforms.

According to a statement by USTR Robert Lighthizer, “President Trump is concerned that many of our trading partners are adopting tax schemes designed to unfairly target our companies.” The Federal Register notice indicates the investigation will focus on how the DSTs diverge from policies set forth in the U.S. and international tax systems. Specifically, the USTR is concerned with the DSTs extraterritoriality, taxing revenue, not income, and “penalizing certain technology companies for their commercial success.”

The USTR is seeking public comment on the following:

Concerns with one or more of the DSTs adopted or under consideration by the jurisdictions covered in these investigations;

  • Whether one or more of the covered DSTs is unreasonable or discriminatory;
  • The extent to which one or more of the covered DSTs burdens or restricts U.S. commerce;
  • Whether one or more of the covered DSTs is inconsistent with obligations under the WTO Agreement or any other international agreement; and /or
  • The determinations required under section 304 of the Trade Act, including what action, if any, should be taken.

Written comments should be submitted through the Federal eRulemaking Portal at  under docket number USTR-2020-0022.

These new investigations may result in additional tariffs on imports from these countries, but that remains to be seen. A similar investigation was completed on DSTs to be levied by France, and while the USTR threatened tariffs on certain French imports, implementation was deferred when France delayed collection of the tax. We will continue to monitor the DST investigations and provide information as it becomes available.

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