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US Weighs Complaint at WTO Against ‘Discriminatory’ New Digital Taxes

The OECD is spearheading talks aimed at forging a new global agreement on taxing technology and digital giants

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FILE - World Trade Organization (WTO) headquarters in Geneva, Switzerland, July 26, 2018. VOA

The U.S. is weighing a complaint at the World Trade Organization against “discriminatory” new taxes on digital giants such as a Facebook and Google which are being planned by France and other EU nations, a top US trade official said Tuesday.

“We think the whole theoretical basis of digital service taxes is ill-conceived and the effect is highly discriminatory against US-based multinationals,” Chip Harter, a Treasury official and US delegate for global tax talks, said in Paris.

Speaking ahead of two days of talks at the Organization for Economic Cooperation and Development (OECD), Harter added that “various parts of our government are studying whether that discriminatory impact would give us rights under trade agreements and WTO treaties.”

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It would be applied retroactively from January 1, 2019, while the measures in the UK and other European countries might not come into effect until next year. Wikimedia

The OECD is spearheading talks aimed at forging a new global agreement on taxing technology and digital giants who often declare their income in low-tax nations, depriving other countries of billions in revenue.

But that overhaul is expected until next year at the earliest, prompting France, Britain, Spain, Austria and Italy to move ahead with their own versions of a so-called “digital services tax” as soon as this year.

Last week France unveiled draft legislation that would set a 3.0-percent levy on digital advertising, the sale of personal data and other revenue for tech groups with more than 750 million euros ($844 million) in worldwide revenue.

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“We think the whole theoretical basis of digital service taxes is ill-conceived and the effect is highly discriminatory against US-based multinationals,” Chip Harte. Wikimedia

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It would be applied retroactively from January 1, 2019, while the measures in the UK and other European countries might not come into effect until next year.

“We do understand there’s political pressure around the world to tax various international businesses more heavily, and we actually agreed that that is appropriate,” Harter told journalists.

“But we think it should be done on a broader basis than just selecting a particular industry,” he said. (VOA)

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Exporting nations to waive duties on 200 IT products

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Geneva: Nations exporting IT products have agreed to waive tariff on about 200 of them, the World Trade Organisation (WTO) said on Saturday.

“In all, 54 WTO members agreed to eliminate tariff on 201 IT products, whose combined value is $1.3 trillion and accounts for 7 percent of the global trade,” WTO said in a statement here.

Products include new generation semi-conductors (chips), GPS navigation, medical equipment, as well as machine tools for manufacturing printed circuits, telecommunications satellites and touch screens.

Terming the deal a landmark, WTO director-general Roberto Azevedo said the IT accord was larger than similar agreements in automotive products, textiles, clothing, iron and steel.

“Eliminating tariff will have a huge impact on prices in other sectors where IT products are used as inputs, create jobs and help boost GDP growth the world over,” Azevedo said, after members agreed to implement the accord on Friday.

Claiming it to be the first of its kind at the trade body in 18 years, Azevedo said the deal was struck just two years after members agreed to the historic package to lower trade barriers at Bali in Indonesia in December 2013.

“We have shown multilateral trading system can deliver real economic results, as evident from the two deals in two years,” Azevedo said.

Asserting that all 161 members of the trade body would benefit from the deal, as they would enjoy duty-free market access in markets, Azevedo said its terms would be circulated at the WTO general council meeting on July 28.

The deal will eliminate major tariff on the 201 products within three years from 2016.

“Exporting members will submit a draft schedule on the terms to other members in October and ahead of the next ministerial conference at Nairobi in Kenya in December,” Azevedo added.

The deal also envisages removing non-tariff barriers in the IT sector and to keep a list of products covered under review to determine expansion in future.

The latest deal is an expansion of the 1996 IT agreement by 81 members then.

When members recognized that technological innovation had advanced so much that many of the new IT products were not covered under the 1996 pact, they began negotiations in 2012 for expanding the list.

(IANS)