U.S. Delays Digital-Tax Tariffs Amid Talks on Broader Deal

The Facebook Inc. app is displayed near Le Sacre Coeur basilica in Paris, France. (Photographer: Cyril Marcilhacy/Bloomberg)

U.S. Delays Digital-Tax Tariffs Amid Talks on Broader Deal

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The U.S. imposed -- but immediately delayed the implementation of -- tariffs in retaliation for duties that six nations placed on internet companies, allowing time for broader international negotiations on taxes.

The decision, announced Wednesday by the office of the U.S. Trade Representative, delays for up to 180 days levies that would have hit goods coming from Austria, India, Italy, Spain, Turkey, and the U.K. Global talks on a broader solution for taxation of big tech companies are being led by the Organization for Economic Cooperation and Development and the Group of 20.

Imports on products that amounted to more than $2 billion in 2019 –- from Italian footwear to Turkish carpets -- would face tariffs of 25% if the duties were to be applied, U.S. trade officials said on a call with reporters. The duties are in response to countries that are imposing taxes on technology firms that operate internationally such as Amazon.com Inc. and Facebook Inc.

U.S. Delays Digital-Tax Tariffs Amid Talks on Broader Deal

“The United States is focused on finding a multilateral solution to a range of key issues related to international taxation, including our concerns with digital services taxes,” U.S. Trade Representative Katherine Tai said in a statement. “Today’s actions provide time for those negotiations to continue to make progress while maintaining the option of imposing tariffs under Section 301 if warranted in the future,” she said, referring to the U.S. law that covers unfair trade practices by other nations.

Negotiators are targeting an October G-20 leaders summit for a final deal on taxes that resolves the issues around internet companies as well as a global minimum rate on corporations.

The USTR officials said the tariffs were suspended based on progress in the international tax negotiations, and that they expect progress to continue. The USTR sees 180 days as ample time to allow the process to advance, they said.

©2021 Bloomberg L.P.

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