US Agreements with Austria, France, Italy, Spain, and the United Kingdom to Avoid Article 301 Obligations of Kelly Tree and Warren LLP

The Office of the United States Trade Representative (USDR) today announced the latest pending USDR agreement with five countries – Austria, France, Italy, Spain and the United Kingdom – regarding activities related to Digital Services Tax (DST). Under Section 301 of the Trade Act of 1974. As a result of this agreement, these countries will avoid a 25% tax on certain imports into the United States.

We have already reported the investigation Who is the NS Who is the, the DST activities of these countries (reported in India and Turkey) include or restrict US trade and are discriminatory and incompatible with current principles of international taxation.[1] In March 2021, with the final results of the survey, Lists proposed by the Office of the United States Trade Representative (USTR) Individuals subject to public opinion and scrutiny in Austria, India, Italy, Spain, Turkey and the United Kingdom are subject to an additional import duty of 25%. In June 2021, the Office of the United States Trade Representative announced that it would suspend the proposed tariff activities for 180 days for six days each. USTR, having considered France’s DST activities first and separately, decided to impose an additional 25% tariff on some French imports in June 2020 and January 2021, suspending what was awaiting further negotiations.

The an agreement Today, the tariffs proposed by Section 301 of the United States were reached with Austria, France, Italy, Spain and the United Kingdom. India and Turkey did not join the agreement. The five countries included in the “political settlement” reached would not have to withdraw existing DST measures. Instead, these countries realized that US companies had no responsibility for DST prior to implementing Pillar 1 of the OECD Comprehensive Tax Agreement. Pillar 1. The OECD Global Tax Agreement is a landmark multidisciplinary tax reform program aimed at addressing the challenges of the digital economy and garnering a high level of political support from the Group of Seven, the Group of Twenty and the 136 members of the Organization for Economic Co-operation and Development. The first pillar of the OECD agreement deals with the allocation of profits from corporate digital services to a global structure. Under today’s Section 301 agreement, once Pillar 1 of the OECD enters into force (2023), the United States will join the five countries in withdrawing taxes on individual digital services.

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The USR’s decision to suspend the controversial satisfactory solution or customs procedures prior to this, effective November 30, 2021, will result in a 25% duty on imports from India and Turkey.

[1] The USDR also looked at DST activities for Brazil, the Czech Republic, the European Union, and Indonesia. In March 2021, the US Trade Representative’s office (USTR) announced that it would suspend these investigations and, without taking action, none of the four jurisdictions under investigation would adopt or enforce any DST policies.

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