Robert Lighthizer. Picture: REUTERS
Robert Lighthizer. Picture: REUTERS

Washington  — The US trade representative's office said on Tuesday it was launching an investigation into digital services taxes adopted or under consideration by a number of US trading partners, in a move that could lead to new punitive tariffs.

“President [Donald Trump] is concerned that many of our trading partners are adopting tax schemes designed to unfairly target our companies,” US Trade Representative Robert Lighthizer said in a statement. “We are prepared to take all appropriate action to defend our businesses and workers against any such discrimination.”

Announcement of the probe came just hours after the US commerce department said it would investigate whether imports of the metal vanadium violate national security, signalling that the Trump administration is actively pursuing new trade barriers despite the coronavirus pandemic.

US President Donald Trump based his nearly two-year trade war with China on a Section 301 investigation into Beijing's intellectual property and technology transfer practices.

Several European countries are considering such a digital-services taxes to raise revenue from the local businesses of companies including Google and Facebook.

An earlier Trump administration probe lead to threats of tariffs against France in 2019.

Broad negotiations through the Organisation for Economic Co-operation and Development to set a global standard for digital taxes have proven elusive, and the coronavirus pandemic has slowed them down.

In a Federal Register notice, the trade representative's office said the probe would cover digital services taxes adopted or under consideration by Austria, Brazil, the Czech Republic, the EU, India, Indonesia, Italy, Spain, Turkey and the UK. The trade agency said it has requested consultations with these governments.

It said the investigation would initially focus on whether the taxes discriminate against US companies, are unfairly retroactive and “possibly unreasonable” in that they diverge from international norms.

“These departures may include: extraterritoriality; taxing revenue not income; and a purpose of penalising particular technology companies for their commercial success,” the notice said.

Reuters