Notice2021-11859
Notice of Action in the Section 301 Investigation of Italy's Digital Services Tax
Primary source
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Published
June 7, 2021
Issuing agencies
Trade Representative, Office of United States
Abstract
On January 6, 2021, the U.S. Trade Representative announced a determination that Italy's Digital Services Tax (DST) is unreasonable or discriminatory and burdens or restricts U.S. commerce. This notice announces the U.S. Trade Representative's determination to take action in the form of additional duties of 25 percent on the products of Italy specified in Annex A to this notice. The U.S. Trade Representative has further determined to suspend application of the additional duties for a period of up to 180 days.
Full Text
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<title>Federal Register, Volume 86 Issue 107 (Monday, June 7, 2021)</title>
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[Federal Register Volume 86, Number 107 (Monday, June 7, 2021)]
[Notices]
[Pages 30350-30353]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-11859]
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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
[Docket Number USTR-2021-0004]
Notice of Action in the Section 301 Investigation of Italy's
Digital Services Tax
AGENCY: Office of the United States Trade Representative (USTR).
ACTION: Notice.
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SUMMARY: On January 6, 2021, the U.S. Trade Representative announced a
determination that Italy's Digital Services Tax (DST) is unreasonable
or discriminatory and burdens or restricts U.S. commerce. This notice
announces the U.S. Trade Representative's determination to take action
in the form of additional duties of 25 percent on the products of Italy
specified in Annex A to this notice. The U.S. Trade Representative has
further determined to suspend application of the additional duties for
a period of up to 180 days.
DATES:
June 2, 2021: The U.S. Trade Representative determined to take
action in the form of additional duties of 25 percent on products of
Italy specified in Annex A.
November 29, 2021: The end of the 180-day suspension period for the
additional duties.
FOR FURTHER INFORMATION CONTACT: For questions concerning the
investigation, please contact Benjamin Allen, Thomas Au, or Patrick
Childress, Assistant General Counsels at: (202) 395-9439, (202) 395-
0380, and (202) 385-9531, respectively; Robert Tanner, Director,
Services and Investment at (202) 395-6125; or Michael Rogers, Director
for Europe and the Middle East at (202) 395-2684. For specific
questions on customs classification or implementation of additional
duties on products, contact <a href="/cdn-cgi/l/email-protection#02767063666770676f67667b426160722c656d74"><span class="__cf_email__" data-cfemail="582c2a393c3d2a3d353d3c21183b3a28763f372e">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Proceedings in the Investigation
Italy has adopted a DST that applies to companies that during the
previous calendar year, generated [euro]750 million or more in
worldwide revenues and [euro]5.5 million or more in revenues deriving
from the provision of digital services in Italy. On June 2, 2020, the
U.S. Trade Representative initiated an investigation of Italy's DST
pursuant to section 302(b)(1)(A) of the Trade Act of 1974, as amended
(Trade Act). See 85 FR 34709 (June 5, 2020) (notice of initiation). The
notice of initiation solicited written comments on, inter alia, the
following aspects of Italy's DST: Discrimination against U.S.
companies; retroactivity; and possibly unreasonable tax policy. With
respect to tax policy, USTR solicited comments on, inter alia, whether
the DST diverged from principles reflected in the U.S. and
international tax systems including extraterritoriality; taxing revenue
not income; and a purpose of penalizing particular technology companies
for their commercial success. Interested persons filed over 380 written
submissions in response. The public submissions are available on
<a href="http://www.regulations.gov">www.regulations.gov</a> in docket number USTR-2020-0022.
Under section 303 of the Trade Act, the U.S. Trade Representative
requested consultations with the government of Italy regarding the
issues involved in the investigation. Consultations were held on
November 10, 2020. Based on information obtained during the
investigation, USTR prepared a comprehensive report on Italy's DST,
which is posted on the USTR website at <a href="https://ustr.gov/issue-areas/enforcement/section-301-investigations/section-301-digital-services-taxes">https://ustr.gov/issue-areas/enforcement/section-301-investigations/section-301-digital-services-taxes</a>. The report includes a full description of Italy's DST, and
supports findings that Italy's DST is unreasonable and discriminatory
and burdens or restricts U.S. commerce. On January 6, 2021, based on
the information obtained during the investigation and the advice of the
Section 301 Committee, the U.S. Trade Representative determined that
Italy's DST is unreasonable or discriminatory and burdens or restricts
U.S. commerce, and therefore is actionable under sections 301(b) and
304(a) of the Trade Act. See 86 FR 2477 (January 12, 2021).
On March 31, 2021, USTR issued a notice proposing that appropriate
action would include additional ad valorem duties of up to 25 percent
on products of Italy to be drawn from a list of 59 tariff subheadings
of the Harmonized Tariff Schedule of the United States (HTSUS) included
in the annex to that notice. The March 31, 2021 notice requested
comments on the proposed action as well as on other potential actions
in the investigation. Witnesses provided testimony at public hearings
on May 3 and May 6, 2021, and interested persons filed written
comments. Transcripts from the hearings are available on the USTR
website at: <a href="https://ustr.gov/issue-areas/enforcement/section-301-investigations/section-301-digital-services-taxes">https://ustr.gov/issue-areas/enforcement/section-301-investigations/section-301-digital-services-taxes</a>. The written public
submissions are available at: <a href="https://comments.ustr.gov/s/docket?docketNumber=USTR-2021-0004">https://comments.ustr.gov/s/docket?docketNumber=USTR-2021-0004</a> and <a href="https://comments.ustr.gov/s/docket?docketNumber=USTR-2021-0008">https://comments.ustr.gov/s/docket?docketNumber=USTR-2021-0008</a>.
II. Determination of Action To Be Taken in the Investigation
In accordance with section 301(b) of the Trade Act, the U.S. Trade
Representative has determined that action is appropriate in this
investigation. Section 301(b) provides that upon determining that the
acts, policies, and practices under investigation are actionable and
that action is appropriate, the U.S. Trade Representative shall take
all appropriate and feasible action authorized under section 301(c) of
the Trade Act, subject to the specific direction, if any, of the
President regarding such action, and all other appropriate and feasible
action within the power of the President that the President may direct
the U.S. Trade Representative to take under section 301(b), to obtain
the elimination of that act, policy, or practice. Section 304(a)(2)(B)
provides that the U.S. Trade Representative shall make the
determination of what action to take on or before the date that is 12
months after the date on which the investigation was initiated, or in
this case, by June 2, 2021.
Pursuant to sections 301(b) and (c) of the Trade Act, and in
accordance with the advice of the Section 301 Committee, the U.S. Trade
Representative has determined that appropriate action is the imposition
of ad valorem duties of 25 percent on products of Italy specified in
Annex A to this notice. Annex A contains a list of 44 tariff
subheadings, with an estimated trade value for calendar year 2019 of
approximately $386 million. In making this determination, the U.S.
Trade Representative considered the public comments submitted in the
investigation, as well as advice of advisory committees. In determining
the level of trade covered by the additional duties, the U.S. Trade
Representative considered the value of digital
[[Page 30351]]
transactions covered by Italy's DST and the amount of taxes assessed by
Italy on U.S. companies. Estimates indicate that the value of the DST
payable by U.S.-based company groups to Italy will be up to
approximately $140 million per year. The level of trade covered by the
action takes into account estimates of the amount of tariffs to be
collected on goods of Italy and the estimates of the amount of taxes
assessed by Italy.
Section 305(a) of the Trade Act provides, in pertinent part, that
the U.S. Trade Representative may delay implementation of the action to
be taken for up to 180 days ``if the Trade Representative determines
that substantial progress is being made, or that a delay is necessary
or desirable . . . to obtain . . . [a] satisfactory solution with
respect to the acts, policies, or practices that are the subject of the
action.'' Pursuant to section 305(a), the U.S. Trade Representative has
determined to suspend the additional duties for up to 180 days (that
is, up to November 29, 2021) to allow additional time for multilateral
and bilateral discussions that could lead to a satisfactory resolution
of this matter.
In order to implement this determination, subchapter III of chapter
99 of the HTSUS is modified by Annex A of this notice. Annex A is
effective with respect to goods entered for consumption, or withdrawn
from warehouse for consumption, on or after 12:01 a.m. eastern standard
time on November 29, 2021, which is 180 days after the determination of
action. In the event the U.S. Trade Representative determines that the
suspension of the additional duties should be for less than a period of
180 days, USTR will issue a subsequent notice amending the effective
date. For informational purposes, Annex B contains a list of the tariff
subheadings covered by the tariff action along with short product
descriptions. In all cases, the formal language in Annex A governs the
tariff treatment of products covered by the action. As specified in
Annex A, products provided for in new HTSUS heading 9903.90.04 will be
subject to an additional ad valorem duty of 25 percent. The additional
duties provided for in the new HTSUS heading established by Annex A
apply in addition to all other applicable duties, fees, exactions, and
charges.
Any product listed in Annex A, except any product that is eligible
for admission under `domestic status' as defined in 19 CFR 146.43,
which is subject to the additional duty imposed by this determination,
and is admitted into a U.S. foreign trade zone on or after 12:01 a.m.
eastern standard time on November 29, 2021, only may be admitted as
`privileged foreign status' as defined in 19 CFR 146.41. Such products
will be subject upon entry for consumption to any ad valorem rates of
duty or quantitative limitations related to the classification under
the applicable HTSUS subheading.
The U.S. Trade Representative will continue to monitor the effect
of the trade action, the progress of discussions in the Organisation
for Economic Co-operation and Development and G20, the progress of
discussions with Italy, and may adopt appropriate modifications. If a
modification to the action may be appropriate, the U.S. Trade
Representative will consider the comments received in response to the
March 31, 2021 notice.
Greta Peisch,
General Counsel, Office of the United States Trade Representative.
Annex A
Effective with respect to goods entered for consumption, or
withdrawn from warehouse for consumption, on or after 12:01 a.m.
eastern standard time on November 29, 2021, subchapter III of chapter
99 of the Harmonized Tariff Schedule of the United States (HTSUS) is
modified:
1. By inserting the following new U.S. notes 25(a) and 25(b) to
subchapter III of chapter 99 in numerical sequence:
``25 (a) For the purposes of heading 9903.90.04, products of Italy,
as specified in this note, shall be subject to additional duties as
provided herein. All products of Italy that are classified in the
subheadings enumerated in this note are subject to the additional
duties imposed by heading 9903.90.04. The duties imposed by heading
9903.90.04 shall be in addition to the general duty rates provided for
in the applicable provisions of the tariff schedule.
Products of Italy that are classified in the subheadings enumerated
in this note and that are eligible for temporary duty exemptions or
reductions under subchapter II to chapter 99 shall be subject to the
additional duties imposed by heading 9903.90.04, and any such duty
exemption or reduction shall apply only to the permanent general rate
prescribed in provisions of chapters 1 through 97 of the tariff
schedule.
The additional duties imposed by heading 9903.90.04 do not apply to
goods for which entry is properly claimed under a provision of chapter
98 of the HTSUS, except for goods entered under subheadings 9802.00.40,
9802.00.50 and 9802.00.60 and heading 9802.00.80. For subheadings
9802.00.40, 9802.00.50 and 9802.00.60, the additional duties apply to
the value of repairs, alterations or processing performed in Italy and
as described in the applicable subheading. For heading 9802.00.80, the
additional duties apply to the value of the article less the cost or
value of such products of the United States, as described in heading
9802.00.80.
Products of Italy that are provided for in heading 9903.90.04 and
classified in one of the subheadings enumerated in note 25(b) to this
subchapter shall continue to be subject to antidumping, countervailing
or other duties (including duties imposed by other provisions of
subchapter III of this chapter and safeguard duties set forth in
provisions of subchapter IV of this chapter), fees, exactions and
charges that apply to such products, as well as to the additional
duties imposed herein.
(b) Heading 9903.90.04 shall apply to all products of Italy that
are classified in the subheadings enumerated below:
1604.31.00
1604.32.40
3303.00.20
3307.90.00
4202.29.10
4202.29.50
4202.29.90
6103.10.10
6103.31.00
6103.32.00
6103.33.20
6103.39.80
6104.32.00
6104.33.20
6110.30.10
6117.80.20
6117.80.87
6203.19.10
6203.31.90
6203.32.10
6203.32.20
6203.33.10
6203.33.20
6203.39.10
6203.39.20
6203.39.50
6203.39.90
6204.31.10
6204.31.20
6204.32.20
6204.33.10
6204.33.40
6204.33.50
6204.39.20
6204.39.30
6204.39.60
6204.39.80
6403.59.60
6403.91.60
6403.91.90
9001.40.00
9001.50.00
[[Page 30352]]
9001.90.40
9001.90.90''.
2. by inserting the following new heading 9903.90.04 in numerical
sequence, with the material in the new heading inserted in the columns
of the HTSUS labeled ``Heading/Subheading'', ``Article Description'',
and ``Rates of Duty 1-General'', respectively:
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Rates of duty
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Heading/subheading Article description 1
--------------------------------------- 2
General Special
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``9903.90.04................... ``Articles the product The duty provided
of Italy, as provided in the applicable
for in U.S. note 25(a) subheading +
to this subchapter and 25%''.
as provided for in the
subheadings enumerated
in U.S. note 25(b) to
this subchapter.
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Annex B
Note: The product descriptions that are contained in this Annex are
provided for informational purposes only, and are not intended to
delimit in any way the scope of the action. In all cases, the formal
language in Annex A governs the tariff treatment of products covered by
the action. Any questions regarding the scope of particular HTSUS
subheadings should be referred to U.S. Customs and Border Protection.
In the product descriptions, the abbreviation ``nesoi'' means ``not
elsewhere specified or included''.
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HTSUS subheading Product description
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1604.31.00....................... Caviar.
1604.32.40....................... Caviar substitutes prepared from fish
eggs, nesoi.
3303.00.20....................... Perfumes and toilet waters, other
than floral or flower waters, not
containing alcohol.
3307.90.00....................... Depilatories and other perfumery,
cosmetic or toilet preparations.
nesoi.
4202.29.10....................... Handbags w. or w/o shld. strap or w/o
handle of mat. (o/t leather, shtng.
of plas., tex. mat., vul. fib. or
paperbd.), paper cov., of plas.
4202.29.50....................... Handbags w. or w/o shld. strap or w/o
handle of mat. (o/t leather, shtng.
of plas., tex. mat., vul. fib. or
paperbd.), pap.cov.,of mat. nesoi.
4202.29.90....................... Handbags with or without shoulder
straps or without handle, with outer
surface of vulcanized fiber or of
paperboard, not covered with paper.
6103.10.10....................... Men's or boys' suits, knitted or
crocheted, of wool or fine animal
hair.
6103.31.00....................... Men's or boys' suit-type jackets and
blazers, knitted or crocheted, of
wool or fine animal hair.
6103.32.00....................... Men's or boys' suit-type jackets and
blazers, knitted or crocheted, of
cotton.
6103.33.20....................... Men's or boys' suit-type jackets and
blazers, knitted or crocheted, of
synthetic fibers, nesoi.
6103.39.80....................... Men's or boys' suit-type jackets and
blazers, of textile mats, (except
wool, cotton, or mmf), cont less
than 70% by wt of silk, knitted/
croc.
6104.32.00....................... Women's or girls' suit-type jackets
and blazers, knitted or crocheted,
of cotton.
6104.33.20....................... Women's or girls' suit-type jackets
and blazers, knitted or crocheted,
of synthetic fibers, nesoi.
6110.30.10....................... Sweaters, pullovers, sweatshirts and
similar articles, knitted or
crocheted, of man-made fibers, cont.
25% or more by weight of leather.
6117.80.20....................... Ties, bow ties and cravats,
containing 70% or more by weight of
silk or silk waste, knitted or
crocheted.
6117.80.87....................... Ties, bow ties and cravats,
containing under 70% by weight of
silk or silk waste, knitted or
crocheted.
6203.19.10....................... Men's or boys' suits, not knitted or
crocheted, of cotton.
6203.31.90....................... Men's or boys' suit-type jackets and
blazers, of wool or fine animal
hair, not knitted or crocheted.
6203.32.10....................... Men's or boys' suit-type jackets and
blazers, not knitted or crocheted,
of cotton, containing 36 percent or
more of flax fibers.
6203.32.20....................... Men's or boys' suit-type jackets and
blazers, not knitted or crocheted,
of cotton, under 36% by weight of
flax.
6203.33.10....................... Men's or boys' suit-type jackets and
blazers, not knitted or crocheted,
of synthetic fibers, cont. 36% or
more of wool or fine animal hair.
6203.33.20....................... Men's or boys' suit-type jackets and
blazers, not knitted or crocheted,
of synthetic fibers, under 36% by
weight of wool.
6203.39.10....................... Men's or boys' suit-type jackets and
blazers, of artificial fibers,
containing 36% or more by weight of
wool or fine animal hair, not k/c.
6203.39.20....................... Men's or boys' suit-type jackets and
blazers, not knitted or crocheted,
of artificial fibers, under 36% by
weight of wool.
6203.39.50....................... Men's or boys' suit-type jackets and
blazers, of textile materials
(except wool, cotton or mmf), cont
70% or more by weight of silk, not k/
c.
6203.39.90....................... Men's or boys' suit-type jackets and
blazers, of text materials (except
wool, cotton or mmf), containing
under 70% by weight of silk, not k/
c.
6204.31.10....................... Women's or girls' suit-type jackets &
blazers, of wool or fine animal
hair, not knitted or crocheted,
cont. 30% or more by weight of silk/
silk waste.
6204.31.20....................... Women's or girls' suit-type jackets
and blazers, of wool or fine animal
hair, not knitted or crocheted,
under 30% by weight of silk/silk
waste.
6204.32.20....................... Women's or girls' suit-type jackets
and blazers, of cotton, not knitted
or crocheted, under 36% flax.
6204.33.10....................... Women's or girls' suit-type jackets
and blazers, not knitted or
crocheted, of synthetic fibers,
cont. 30% or more of silk/silk
waste.
6204.33.40....................... Women's or girls' suit-type jackets &
blazers, not knitted or crocheted,
of synthetic fibers, cont. 36% or
more of wool or fine animal hair.
6204.33.50....................... Women's or girls' suit-type jackets
and blazers, not knitted or
crocheted, of synthetic fibers,
nesoi.
6204.39.20....................... Women's or girls' suit-type jackets &
blazers, not knitted or crocheted,
of artificial fibers, cont. 36% or
more by weight of wool or fine
animal hair.
[[Page 30353]]
6204.39.30....................... Women's or girls' suit-type jackets
and blazers, not knitted or
crocheted, of artificial fibers,
under 36% by weight of wool or fine
animal hair.
6204.39.60....................... Women's or girls' suit-type jackets
and blazers, not knitted/crocheted,
of othertextile materials nesoi,
cont. 70% + by weight of silk or
silk waste.
6204.39.80....................... Women's or girls' suit-type jackets
and blazers, not knitted or
crocheted, of textile materials
nesoi.
6403.59.60....................... Footwear w/outer soles and uppers of
leather, not cov. ankle, n/welt, for
men, youths and boys.
6403.91.60....................... Footwear w/outer soles of rubber/
plastics/composition leather &
uppers of leather, covering the
ankle, n/welt, for men, youths and
boys.
6403.91.90....................... Footwear w/outer soles of rubber/
plastics/comp. leather & uppers of
leather, cov. ankle, n/welt, for
persons other than men/youths/boys.
9001.40.00....................... Spectacle lenses of glass, unmounted.
9001.50.00....................... Spectacle lenses of materials other
than glass, unmounted.
9001.90.40....................... Lenses nesoi, unmounted.
9001.90.90....................... Optical elements nesoi, unmounted.
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[FR Doc. 2021-11859 Filed 6-4-21; 8:45 am]
BILLING CODE 3290-F1-P
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