Talks to remove digital taxes should end tariff risks -U.S. Treasury officials

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WASHINGTON, Oct 12 (Businesshala) – Negotiations on rolling back existing digital services taxes after a historic corporate tax deal should eventually end the threat of a tariff war between the United States and several countries over tariffs, US Treasury officials said. he said.

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In OECD tax settlement, 136 countries agreed last Friday to adopt a 15% minimum corporate tax and to partially reallocate tax rights to large, highly profitable companies where they sell products and services.

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In turn, the deal requires all countries to unilaterally remove the Digital Services Tax (DST), which largely targets the US technology giant. It also prohibits new digital levies from coming into force immediately or until the end of 2023.

Transitional arrangements for the removal of DST are “increasingly being discussed.”

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Treasury officials told reporters on a conference call that negotiations on the details of these arrangements were expected to require the United States to pursue retaliatory tariffs to countries that have imposed digital services taxes.

The Office of the US Trade Representative has drawn up tariffs on their digital services taxes against imports from France, Britain, Italy, Spain, Austria, India and Turkey, but to allow negotiations on a global tax deal to eliminate them. is suspended.

The proposed tariffs on French goods would put 25% tariffs on cosmetics, handbags and other imports worth about $1.3 billion, while Paris itself has threatened retaliation.

One of the Treasury officials said the department is coordinating closely with the US Trade Representative’s office on removing digital tariffs.

Another Treasury official said that implementation of the OECD agreement’s reallocation of tax rights, known as “Pillar 1”, could take several months to complete, and the Treasury estimates that it will be done with bipartisan support. Will be done.

Senior US Senate Republicans have argued that this would require a new international tax treaty, which would require ratification with a two-thirds Senate majority. He told Treasury Secretary Janet Yellen a letter that they were concerned that the Biden administration was considering bypassing the need to obtain the Senate’s authority to enforce the treaties.

The Pillar 1 agreement was designed to appeal to both parties, providing tax certainty for US businesses without compromising US revenue, the US Treasury official said. The official said it was too early to consider a passage without bipartisan support, but did not say whether a treaty would be needed.

Reporting by David Lauder; Editing by Sandra Maler

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