Digital tax: USTR proposes retaliatory trade actions against India, other countries

NEW DELHI:  The United States Trade Representative (USTR) has slammed India’s digital services tax which, it said. discriminates against US firms like Google, Facebook and Amazon. The trade body has also proposed retaliatory trade actions against India and five other countries — Italy, Turkey, U.K., Spain and Austria – that have or will be imposing a levy or digital services tax on e-commerce companies. It has issued notices seeking public comments on the proposed trade actions.

The USTR, in a statement, said that 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. With respect to the Indian Digital Services Tax, the USTR has said that it has requested written comments regarding a potential trade action in connection with Sec. 301 investigation of India’s Digital Services Tax.

According to USTR’s findings, out that of the 119 firms that are likely subjected to India’s equalisation levy of 2 per cent, a total of 86 or 72 per cent are US companies. Of the rest, seven firms each were from China and UK, while there were 6 French firms and five Japanese companies which too were impacted, USTR said. Meanwhile, minister of commerce and industry Piyush Goyal spoke to his counterpart US trade representative Katherine Tai on Thursday and have agreed to work “constructively” to resolve outstanding trade issues and take a “comprehensive” look at ways to expand the relationship.

But, there was no explicit reference to a trade agreement in the readout of their conversation issued by the office of the USTR. It was not clear if the two sides intend to pick up from where the Trump administration had left off or start afresh, as Goyal suggested some weeks ago. Commerce Ministry officials argue that there was no inherent discrimination and that the levy was imposed on foreign firms which did not have any significant operations in India but sold here, “in order to bring them on par with Indian e-commerce firms which were subject to a number of taxes.”