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Biden team used tariffs in international fight to tax Big Tech

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The Biden administration on Wednesday threatened to impose tariffs on goods from six countries that levied digital services tax on tech companies like Google and Facebook.

US Trade Representative Catherine Tai announced the tariffs but immediately suspended trade action for 180 days to provide additional time for international negotiations.

The tariffs will target Austria, India, Italy, Spain, Turkey and the United Kingdom, which have adopted digital services taxes.

The taxes, which affect tech companies that do not have corporate offices in the taxing country but have users or customers there, have been at the center of fierce international debate for at least two years as nations adapt to the new reality. try to be. of global digital commerce.

“The United States is focused on finding a multilateral solution to key issues related to international taxation, including our concerns with digital services taxes,” Ms. Tai said. “The United States is committed to reaching a consensus on international tax issues through the OECD” [Organization for Economic Co-operation and Development] and G20 processes.”

She said the move allows negotiations to proceed “while retaining the option to levy tariffs”.

Under current international tax rules, multinationals typically only pay corporate taxes in the country where they are headquartered or where their production is based – not in the countries where their customers are.

The approval of the tariffs follows an annual trade investigation, known in Washington as the Section 301 investigation, which was launched by the Trump administration.

Former President Trump was widely criticized for his use of tariffs in furtherance of trade policies, including dealings with China and the European Union.

Digital services taxes target the largest players in tech-based commerce and mostly affect US companies.

Australia imposed a 10% digital services tax on non-resident tech companies, the highest rate among the six countries.

Turkey has a digital services tax rate of 7.5%, followed by Spain and Italy at 3% and the UK and India at 2%.

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