Notice2021-11861
Notice of Action in the Section 301 Investigation of Turkey'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 Turkey'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 Turkey 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 30353-30356]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-11861]
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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
[Docket Number USTR-2021-0006]
Notice of Action in the Section 301 Investigation of Turkey'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 Turkey'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
Turkey 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
Turkey 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#85f1f7e4e1e0f7e0e8e0e1fcc5e6e7f5abe2eaf3"><span class="__cf_email__" data-cfemail="e0949281848592858d858499a0838290ce878f96">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Proceedings in the Investigation
Turkey has adopted a DST that applies to companies that during the
previous calendar year, generated [euro]750 million or more in
worldwide revenues and TRY 20 million or more in revenues deriving from
the provision of digital services in Turkey. On June 2, 2020, the U.S.
Trade Representative initiated an investigation of Turkey'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 Turkey'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 Turkey regarding the
issues involved in the investigation. Consultations were held on
September 29, 2020. Based on information obtained during the
investigation, USTR prepared a comprehensive report on Turkey'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 Turkey's DST, and
supports findings that Turkey'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
Turkey'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 2480 (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 Turkey to be drawn from a list of 45 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
held on May 3 and May 7, 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-2021-0006">https://comments.ustr.gov/s/docket?docketNumber=USTR-2021-0006</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
[[Page 30354]]
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 Turkey specified in Annex A to this
notice. Annex A contains a list of 32 tariff subheadings, with an
estimated trade value for calendar year 2019 of approximately $310
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 transactions covered by Turkey's DST
and the amount of taxes assessed by Turkey on U.S. companies. Estimates
indicate that the value of the DST payable by U.S.-based company groups
to Turkey will be up to approximately $160 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 Turkey and the estimates
of the amount of taxes assessed by Turkey.
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 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 9903.90.06 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 Turkey, 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 27(a) and 27(b) to
subchapter III of chapter 99 in numerical sequence:
``27 (a) For the purposes of heading 9903.90.06, products of
Turkey, as specified in this note, shall be subject to additional
duties as provided herein. All products of Turkey that are classified
in the subheadings enumerated in this note are subject to the
additional duties imposed by heading 9903.90.06. The duties imposed by
heading 9903.90.06 shall be in addition to the general duty rates
provided for in the applicable provisions of the tariff schedule.
Products of Turkey 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 9903.90.06, 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 9903.90.06 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 Turkey 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 Turkey that are provided for in heading 9903.90.06 and
classified in one of the subheadings enumerated in note 27(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 9903.90.06 shall apply to all products of Turkey that
are classified in the subheadings enumerated below:
5701.10.16
5701.10.90
5701.90.10
5702.31.20
5702.42.10
[[Page 30355]]
5702.92.10
5702.99.05
5702.99.15
5703.20.20
5703.90.00
6302.22.20
6302.32.20
6802.21.10
6802.21.50
6802.92.00
6907.21.10
6907.21.90
6907.23.90
6907.30.20
6907.30.30
6907.30.90
6907.40.90
6910.10.00
6913.10.50
6913.90.50
7113.11.20
7113.19.50
7113.20.29
7113.20.50
7116.20.05
7117.19.90
7117.90.90''.
2. by inserting the following new heading 9903.90.06 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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``9903.90.06................... ``Articles the product The duty provided
of Turkey, as provided in the applicable
for in U.S. note 27(a) subheading +
to this subchapter and 25%''.
as provided for in the
subheadings enumerated
in U.S. note 27(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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5701.10.16....................... Carpets & other textile floor
coverings, hand-knotted or hand-
inserted, w/ov 50% by weight of the
pile of fine animal hair, nesoi.
5701.10.90....................... Carpets and other textile floor
coverings, of wool or fine animal
hair, not hand-hooked, not hand
knotted during weaving.
5701.90.10....................... Carpet and other textile floor
covering, knotted, of text.
materials (not wool/hair), pile
inserted & knotted during weaving or
knitting.
5702.31.20....................... Carpets and other textile floor
coverings of pile construction,
woven, not tufted or flocked, not
made up, of wool/fine animal hair,
nesoi.
5702.42.10....................... Wilton, velvet and like floor
coverings of pile construction,
woven, not tufted or flocked, made
up, of man-made textile materials.
5702.92.10....................... Hand-loomed carpet & other textile
floor coverings, not of pile
construction, woven, made up, of man-
made textile materials.
5702.99.05....................... Hand-loomed carpets and other textile
floor coverings, not of pile
construction, woven, made up, of
cotton.
5702.99.15....................... Carpets and other textile floor
coverings, not of pile construction,
woven, made up, of cotton, nesoi.
5703.20.20....................... Carpets and other textile floor
coverings, tufted, whether or not
made up, of nylon or other
polyamides, nesoi.
5703.90.00....................... Carpets and other textile floor
coverings, tufted, whether or not
made up, of other textile materials
nesoi.
6302.22.20....................... Bed linen, not knitted or crocheted,
printed, of manmade fibers, nesoi.
6302.32.20....................... Bed linen, not knitted or crocheted,
not printed, of manmade fibers,
nesoi.
6802.21.10....................... Worked monumental or building stone &
arts. thereof, of travertine, simply
cut/sawn, w/flat or even surface.
6802.21.50....................... Worked monumental or building stone &
arts. thereof, of marble or
alabaster, simply cut/sawn, w/flat
or even surface.
6802.92.00....................... Worked monumental or building stone &
arts. thereof, of calcareous stone,
nesoi, further worked than simply
cut/sawn.
6907.21.10....................... Unglazed ceramic flags and paving,
hearth or wall tiles, other than
those of subheading 6907.30 and
6907.40, of H2O absorp coeff by wt
<=0.5%.
6907.21.90....................... Glazed ceramic flags and paving,
hearth or wall tile, o/t subheading
6907.30 and 6907.40, of a H2O absorp
coeff by wt <=0.5%, nesoi.
6907.23.90....................... Glazed ceramic flags and paving,
hearth or wall tiles, o/t subheading
6907.30 and 6907.40, of a H2O absorp
coeff by wt >10%, nesoi.
6907.30.20....................... Glazed ceramic mosaic cubes, o/t
subheading 6907.40, having <=3229
cubes per m2, surf area in sq w/side
<7cm.
6907.30.30....................... Glazed ceramic mosaic cubes, o/t
subheading 6907.40, having surface
area <38.7cm2, surf area in sq w/
side <7cm.
6907.30.90....................... Glazed ceramic mosaic cubes nesoi, o/
t subheading 6907.40.
6907.40.90....................... Glazed finishing ceramics nesoi.
6910.10.00....................... Porcelain or china ceramic sinks,
washbasins, baths, bidets, water
closet bowls, urinals & siml.
sanitary fixtures.
6913.10.50....................... Porcelain or china (o/than bone
china) ornamental articles, nesoi.
6913.90.50....................... Ceramic (o/than porcelain, china,
ceramic tile or earthenware)
ornamental articles, nesoi.
7113.11.20....................... Silver articles of jewelry and parts
thereof, nesoi, valued not over $18
per dozen pieces or parts.
7113.19.50....................... Precious metal (o/than silver)
articles of jewelry and parts
thereof (o/t necklaces of gold, and
clasps and parts thereof), whether
or not plated or clad with precious
metal, nesoi.
7113.20.29....................... Base metal clad w/gold necklaces and
neck chains, nesoi.
7113.20.50....................... Base metal clad w/precious metal
articles of jewelry and parts
thereof (o/t necklaces of gold, and
clasps and parts thereof), nesoi.
7116.20.05....................... Jewelry articles of precious or
semiprecious stones, valued not over
$40 per piece.
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7117.19.90....................... Imitation jewelry (o/than cuff links
and studs, toy jewelry, religious
articles & rope, curb, cable, chain,
etc.), of base metal (wheth. or n/
plated w/prec.metal), nesoi.
7117.90.90....................... Imitation jewelry not of base metal
or plastics, nesoi, over 20 cents/
dozen pcs or pts, o/t toy jewelry or
of plastics.
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[FR Doc. 2021-11861 Filed 6-4-21; 8:45 am]
BILLING CODE 3290-F1-P
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