The US government has issued reports on its investigations into digital service taxes adopted in India, Italy and Turkey. For the moment, the US Trade Representative has decided against taking any retaliatory action against the countries. The representative's office said it was also suspending sanctions on France that were expected to take effect 06 January, while it completes its investigations into levies imposed by other countries.
The US launched the investigations in June 2020, along with similar inquiries into digital taxes introduced or proposed by Austria, Brazil, the Czech Republic, the European Union, Indonesia, Spain and the UK. The taxes target large online platforms such as Google and Facebook, which generate significant revenue from online advertising but often pay little corporate income tax due to their limited physical presence in the country. The American government claims the taxes are "inconsistent with prevailing principles of international taxation" and create an undue burden on US companies and trade.
The US government has threatened to impose its own trade barriers on foreign countries that impose the digital taxes and has come closest to taking action against France. Nevertheless, the USTR said it is not taking any specific action based on the first results of its investigations, "but will continue to evaluate all available options". Additional investigations on the matter are expected to be completed in the near future.
The sanctions against France were announced in July 2020 and planned to take effect this month. The USTR said it was suspending the measures in light of the ongoing investigations into similar taxes in other countries, so it can later present a coordinated response.
