WASHINGTON – In a new detailed legal analysis submitted to the Office of the United States Trade Representative (USTR), global tech trade association ITI concluded that unilateral digital services taxes (DSTs) under investigation in 10 jurisdictions are unfair trade practices under Section 301 of the Trade Act of 1974. In today’s submission, ITI reiterated its support for multilateral discussions to develop a stable, consensus-based solution that addresses the tax challenges arising from the digitalization of the global economy.
“Unilateral digital taxation measures advance a troubling precedent, depart from progress toward stable and sustainable international tax policies, and disproportionately impact U.S.-headquartered companies,” said ITI President and CEO Jason Oxman. “A USTR finding that the digital services taxes under investigation are unfair trade practices under Section 301 is a crucial step in pushing back against these measures, which continue to proliferate in number and expand in scope.”
“In our comments, we provide USTR with evidence to support a determination that these new DSTs – like the French DST – are unfair trade practices under Section 301,” ITI wrote in its submission. “[…] Notably, many of the DSTs are structured similarly to the French DST and share the same problematic features that USTR identified in its Report on France’s Digital Services Tax (French DST Report), including scope limitations and revenue thresholds that are meant to target U.S. companies and shield domestic companies. Other DSTs explicitly target an increasingly broad range of foreign companies, including U.S. companies.”
“We have confidence that USTR’s current investigations, together with USTR’s investigation of the French DST, will provide impetus for all countries concerned to continue their commitment to negotiations to eliminate unilateral DSTs and achieve a sustainable, multilateral consensus on the rules governing international corporate taxation. Global tax policy challenges – like those arising from the digitalization of the global economy – require consensus global tax policy solutions,” ITI continued.