USTR Initiates Section 301 Digital Services Tax Investigations Covering India, The European Union And Several Other Countries

The Office of the U.S. Trade Representative (“USTR”) announced on June 2, 2020 that it is initiating Section 301 investigations on Digital Services Taxes (“DSTs”) adopted or under consideration by Austria, Brazil, Czech Republic, the European Union (“EU”), India, Indonesia, Italy, Spain, Turkey, and the United Kingdom (“U.K.”). The Section 301 DST investigations could lead the U.S. to impose new punitive tariffs and could significantly raise global trade tensions.

USTR is soliciting public comments from parties and these must be submitted no later than July 15, 2020. Written comments should be submitted through the Federal eRulemaking Portal at under docket number USTR-2020-0022. According to the Federal Register notice, the USTR invites comments with respect to:

  • Concerns with one or more of the DSTs adopted or under consideration by the jurisdictions covered in these investigations.
  • Whether one or more of the covered DSTs is unreasonable or discriminatory.
  • The extent to which one or more of the covered DSTs burdens or restricts U.S. commerce.
  • Whether one or more of the covered DSTs is inconsistent with obligations under the WTO Agreement or any other international agreement.
  • The determination required under section 304 of the Trade Act, including what action, if any, should be taken.

Over the last couple of years, various governments have enacted or considered taxes on revenues generated by companies from providing digital services within those jurisdictions. While the proponents of DSTs argue that the tax corrects corporate taxation to cover previously untaxed or undertaxed revenues, the position of the Trump administration, including the USTR, is that DSTs unfairly discriminate against “large, U.S.-based tech companies” such as Amazon and Google. USTR’s announcement provides a brief but detailed overview of the current status of each of the named jurisdictions’ enacted or proposed DSTs.

USTR’s initiation of Section 301 investigations follow a period of intermittent tensions between the U.S. and some of its trading partners over proposed DSTs. In December 2019, the U.S. and France nearly began a trade war over the DST adopted by France, which USTR described as “unreasonable, discriminatory, and burdensome on U.S. commerce.” However, these tariffs were never implemented on imports of products from France. In January of this year, the Trump administration had also threatened the U.K. with tariffs on imports of British cars if the U.K. pressed forward with its DST.

A possible result of these new investigations will be the institution of additional tariffs on imports of products from each of the named countries but that remains to be seen and will depend in large part on the support or opposition to the institution of trade remedies in the comments filed on the record of these investigations.

Husch Blackwell continues to monitor the Section 301 investigations on Digital Services Taxes and will provide further updates as more information becomes available.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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