Washington D.C. – The National Foreign Trade Council (NFTC) today released a statement in response to USTR’s announcement that it will initiate Section 301 investigations into multiple countries who have adopted or who are considering discriminatory, unilateral digital services taxes.
NFTC shares the U.S. Government’s growing concern about the adoption of tax programs that discriminate against U.S. companies. These measures undermine the U.S. tax base, threaten to undermine established international principles of taxation and are exactly the wrong response to post-pandemic economic recovery efforts.
Despite ongoing negotiations at the Organization for Economic Cooperation and Development (OECD) on the tax challenges of the digitization of the economy, a number of countries around the world have bypassed the multilateral approach and adopted or telegraphed plans to impose discriminatory digital services taxes.
For example, last week, the EU announced a blueprint for economic recovery which called for a Europe-wide DST and a separate single market tax that would fall disproportionately on American businesses to help pay for European COVID recovery. Other jurisdictions, including Indonesia and India, have also recently announced or enacted discriminatory digital services taxes that target a wide variety of digital industries and disproportionately affect U.S. companies.
Because of their discriminatory nature, unilateral DSTs are certain to escalate trade tensions between the United States and many of our closest trading partners. USTR’s announcement illustrates the high priority the U.S. Government places on pushing back against actions taken outside of the multilateral process. We support the U.S. Government taking steps to protect U.S. businesses from these discriminatory tax regimes. We also encourage the U.S. Government to be mindful of the unintended economic consequences that retaliation could have on U.S. businesses and consumers not party to these concerns.
NFTC urges countries to drop unilateral DSTs and to work towards a multilateral consensus on new non-discriminatory tax rules at the OECD in order to avoid undermining the global tax and trade systems.
About the NFTC
Serving America’s Global Businesses Since 1914– The National Foreign Trade Council (www.nftc.org) is a leading business organization advocating an open, rules- based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves its member companies through its office in Washington D.C.
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