Trump Administration Escalates Global Fight Over Taxing Tech
The investigations are being carried out under Section 301 of the Trade Act of 1974, which gives the government broad authority to respond to unfair practices that negatively affect U.S. commerce. The administration has used the same legal provision to initiate a trade war with China, which resulted in tariffs on roughly $360 billion of Chinese products.
In addition to India, Brazil, Britain and the European Union, the Office of the United States Trade Representative said it would investigate taxes in Austria, the Czech Republic, Indonesia, Italy, Spain and Turkey.
“President Trump is concerned that many of our trading partners are adopting tax schemes designed to unfairly target our companies,” Robert E. Lighthizer, the trade representative, said in a statement. “We are prepared to take all appropriate action to defend our businesses and workers against any such discrimination.”
While the U.S. has been part of the multinational digital tax discussions, negotiations ran into trouble this year, shortly before the spread of the coronavirus plunged countries around the world into lockdowns. The Trump administration had been pushing for a provision that would effectively allow some American companies to choose whether to be governed by any new tax system created by a global agreement.
The companies that are most likely to be affected by many countries’ digital taxes are American technology giants, including eBay and Google, but some proposals could apply to any large companies that do business online, not just tech firms.
Jordan Haas, the director of trade policy for the Internet Association, whose members include Facebook, Google and Amazon, said in a statement that the group appreciated the trade representative’s ongoing work pushing back on the taxes.
“The U.S. must continue sending a strong message to trading partners that targeted discriminatory taxes against U.S. firms are not an appropriate solution,” he said.