US initiates retaliatory action against six countries over digital tax

Mar 29, 2021 12:24 UTC

The United States has begun to take retaliatory action against six countries for imposing a levy or digital services tax on e-commerce companies that have impacted US enterprises.

According to Press TV, this comes after the office of the US Trade Representative (USTR) initiated a probe in June 2020 under section 301 of the Trade Act.

In January 2021, the USTR released the findings of the investigation that showed India and the other 5 countries - Italy, Turkey, the UK, Spain and Austria - discriminated against US companies like Amazon, Google, and Facebook by levying the tax.

India imposed a 2 percent equalisation levy on sales of products and services by e-commerce firms in Budget 2020.

"Consequent to the determination and findings, now USTR has proposed a retaliatory action under Section 301 against India's equalisation levy, along with other countries," a source said, according to Bloombergquint.

Meanwhile, US Trade Representative Katherine said Saturday Washington is working with its trading partners to address its concerns with digital services taxes.

“The United States remains committed to reaching an international consensus through the OECD (The Organisation for Economic Co-operation and Development) process on international tax issues. However, until such a consensus is reached, we will maintain our options under the Section 301 process, including, if necessary, the imposition of tariffs.”

In response, India said it will examine the proposed action and will act accordingly.

"The government of India will examine the proposed action with stakeholders concerned and take suitable measures keeping its trade and commercial interest of the country and overall interest of its people," Commerce Ministry officials in Delhi said.

USTR has the mandate to hold negotiations on bilateral trade and investment issues of the United States.

In its statement, USTR said it “is proceeding with the public notice and comment process on possible trade actions to preserve procedural options before the conclusion of the statutory one-year time period for completing the investigations.”

This marks the first trade related friction witnessed between the administration of US President Joe Biden and Indian Prime Minister Narendra Modi’s administration.