USA to impose tariffs on British and Spanish imports due to ‘Google Tax’

The United States trade representative Katherine Tai announced on June 2 the conclusion of the one-year investigations of digital service taxes (DSTs) (so called Google Tax).

THESE taxes have been adopted by Austria, India, Italy, Spain, Turkey and the United Kingdom and as a result of the probe, additional tariffs equivalent to 25 per cent will now be imposed on certain goods from these countries.

However, the tariffs have been suspended for up to 180 days to offer additional time to complete the ongoing multilateral negotiations and Tai commented “The United States remains committed to reaching a consensus on international tax issues through the OECD and G20 processes.

“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.”

In January 2021, following comprehensive investigations USTR determined that the DSTs adopted by Austria, India, Italy, Spain, Turkey, and the United Kingdom discriminated against US digital companies, were inconsistent with principles of international taxation, and burdened US companies.

Spain has adopted a DST that applies a 3 per cent tax on certain digital services revenues related to online advertising services, online intermediary services, and data transmission services.

Companies with worldwide revenues of €750 million or more and €3 million in certain digital services revenues are subject to the DST.

As far as Spain is concerned, these tariffs will be collected on imports of belts, handbags, octopus, prawns, shoes and shrimps.

The United Kingdom has adopted a DST that applies a 2 per cent tax on the revenues of certain search engines, social media platforms and online marketplaces.

The United Kingdom’s DST applies only to companies with digital services revenues exceeding £500 (€550) million and United Kingdom digital services revenues exceeding £25 (€27.5) million but even though the tax being charged by the UK is much lower than Spain, considerably more goods, including white goods, clothing and even video games are to be charged the additional tariff.

So much for the ‘special relationship’!