BACK AT YOU TAX
US proceeds with $1 billion retaliatory tariff plan over digital duties
The U.S. is pressing ahead with plans to hit six nations that tax internet-based companies with retaliatory tariffs that could total almost $1 billion annually.
Goods entering the U.S. — ranging from Austrian grand pianos and British merry-go-rounds to Turkish Kilim rugs and Italian anchovies — could face tariffs of as much as 25% annually, documents published by the U.S. Trade Representative show. The duties are in response to countries imposing taxes on technology firms that operate internationally like Amazon and Facebook.
The USTR proposes to impose tariffs that would roughly total the amount of tax revenue each country is expected to get from the U.S. companies. The cumulative annual value of the duties comes to $880 million, Bloomberg estimates. Potentially affected countries include: THE U.K. APPLIES A 2% TAX on the revenues of certain search engines, social-media platforms and online marketplaces. The tax affects companies with digital-services revenue exceeding 500 million pounds and U.K.-specific digital-services revenues exceeding 25 million pounds. The USTR estimates the DST payable by U.S.-based company groups to the U.K. be about $325 million annually. Potentially affected goods include art supplies, make-up and cosmetics, apparel, swing boats and other fairground amusements.
ITALY’S DST APPLIES TO COMPANIES that during the previous calendar year generated 750 million euros or more in worldwide revenue, and 5.5 million euros or more in revenue deriving from the provision of digital services in Italy. The USTR estimates the value of the DST payable by U.S.-based firms to Italy at about $140 million annually. Potentially affected goods include caviar, handbags, suits and bowties.
SPAIN CHARGES A 3% TAX on certain digital-services revenue related to online advertising services, online intermediary services, and datatransmission services. Companies with worldwide revenue of 750 million euros or more and 3 million euros in certain digital-services revenues are subject to the DST. USTR estimates that the value of the DST payable by U.S.-based companies to Spain will be as much as $155 million annually. Potentially affected goods include shrimp and footwear.
TURKEY’S DST APPLIES TO COMPANIES that during the previous
calendar year generated 750 million euros or more in worldwide revenues and 20 million lira or more in revenue from providing digital services in the nation. U.S. based companies would pay Turkey about $160 million in taxes annually. Carpets, hand-woven rugs and glazed ceramic tiles are among the goods that could be affected.
INDIA’S DST IMPOSES A 2% TAX on revenue of non-resident firms generated from a range of digital services offered in the country. TheDST payable by U.S. companies to India will be up to about $55 million annually. Goods affected include shrimp, blinds, bamboo products, gold jewelry and rattan furniture.
AUSTRIA’S DST IMPOSES A 5% TAX on gross revenue from digital advertising services provided in the country. It only applies to companies with annual global revenue of 750 million euros or more, and annual revenues from digital advertising services in Austria of 25 million euros or more. The DST payable by U.S.-based companies to Austria will be up to about $45 million annually. Leather goods, fabrics, optical telescopes and microscopes are among the products that could be affected.