Notice2021-11862
Notice of Action in the Section 301 Investigation of the United Kingdom's Digital Services Tax
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Published
June 7, 2021
Issuing agencies
Trade Representative, Office of United States
Abstract
On January 14, 2021, the U.S. Trade Representative announced a determination that the United Kingdom'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 the United Kingdom 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.
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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 30364-30367]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-11862]
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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
[Docket Number USTR-2021-0007]
Notice of Action in the Section 301 Investigation of the United
Kingdom's Digital Services Tax
AGENCY: Office of the United States Trade Representative (USTR).
ACTION: Notice.
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SUMMARY: On January 14, 2021, the U.S. Trade Representative announced a
determination that the United Kingdom'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 the United Kingdom 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
the United Kingdom 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#42363023262730272f27263b022120326c252d34"><span class="__cf_email__" data-cfemail="691d1b080d0c1b0c040c0d10290a0b19470e061f">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Proceedings in the Investigation
The United Kingdom has adopted a DST that applies a two percent tax
on the revenues of certain search engines, social media platforms and
online marketplaces. The United Kingdom's DST applies only to companies
with digital services revenues exceeding [pound]500 million and United
Kingdom digital services revenues exceeding [pound]25 million. On June
2, 2020, the U.S. Trade Representative initiated an investigation of
the United Kingdom'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 the United Kingdom'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 the United Kingdom
regarding the issues involved in the investigation. Consultations were
held on December 4, 2020. Based on information obtained during the
investigation, USTR prepared a comprehensive report on the United
Kingdom's DST, which is posted on the USTR website at <a href="https://ustr.gov/issue-areas/enforcement/section-301-investigations/section-301-digitalservices-taxes">https://ustr.gov/issue-areas/enforcement/section-301-investigations/section-301-digitalservices-taxes</a>. The report includes a full description of the
United Kingdom's DST, and supports findings that the United Kingdom's
DST is unreasonable and discriminatory and burdens or restricts U.S
commerce. On January 14, 2021, based on the information obtained during
the investigation and the advice of the Section 301 Committee, the U.S.
Trade Representative determined that the United Kingdom'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 6406 (January 21, 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 the United Kingdom to be drawn from a list of 69 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-2021-0007">https://comments.ustr.gov/s/docket?docketNumber=USTR-2021-0007</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
[[Page 30365]]
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 the United Kingdom
specified in Annex A to this notice. Annex A contains a list of 67
tariff subheadings, with an estimated trade value for calendar year
2019 of approximately $887 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 the United Kingdom's DST and the amount of taxes assessed by
the United Kingdom on U.S. companies. Estimates indicate that the value
of the DST payable by U.S.-based company groups to the United Kingdom
will be up to approximately $325 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 the United Kingdom and the
estimates of the amount of taxes to be assessed by the United Kingdom.
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 an
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 9903.90.07 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 the United Kingdom, 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 28(a) and 28(b) to
subchapter III of chapter 99 in numerical sequence:
``28 (a) For the purposes of heading 9903.90.07, products of the
United Kingdom, as specified in this note, shall be subject to
additional duties as provided herein. All products of the United
Kingdom that are classified in the subheadings enumerated in this note
are subject to the additional duties imposed by heading 9903.90.07. The
duties imposed by heading 9903.90.07 shall be in addition to the
general duty rates provided for in the applicable provisions of the
tariff schedule.
Products of the United Kingdom 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 9903.90.07, 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 9903.90.07 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 the United
Kingdom 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 the United Kingdom that are provided for in heading
9903.90.07 and classified in one of the subheadings enumerated in note
28(b) to this subchapter shall continue to be subject to antidumping,
countervailing or other duties (including duties imposed by
[[Page 30366]]
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 9903.90.07 shall apply to all products of the United
Kingdom that are classified in the subheadings enumerated below:
3213.90.00
3303.00.10
3303.00.20
3303.00.30
3304.10.00
3304.20.00
3304.30.00
3304.91.00
3304.99.10
3304.99.50
3305.10.00
3305.20.00
3305.30.00
3305.90.00
3306.90.00
3307.10.10
3307.10.20
3307.30.10
3307.30.50
3307.49.00
3307.90.00
4201.00.60
6104.43.20
6201.12.20
6201.92.45
6202.12.20
6202.13.40
6202.92.90
6204.43.40
6204.44.40
6204.49.10
6205.20.20
6215.10.00
6403.59.30
6403.59.90
6403.91.30
6403.99.60
6404.20.40
6903.90.00
6907.23.90
6907.30.90
6910.90.00
7113.11.50
7113.19.29
7113.19.50
7116.20.50
7117.19.90
8415.82.01
8418.40.00
8418.50.00
8418.69.01
8532.24.00
9001.10.00
9401.71.00
9403.10.00
9403.20.00
9403.40.90
9403.60.80
9403.89.60
9503.00.00
9504.50.00
9504.90.40
9504.90.60
9504.90.90
9508.10.00
9508.90.00
9603.29.80''.
2. by inserting the following new heading 9903.90.07 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:
----------------------------------------------------------------------------------------------------------------
Rates of duty
-------------------------------------------------------
Heading/subheading Article description 1
--------------------------------------- 2
General Special
----------------------------------------------------------------------------------------------------------------
``9903.90.07................... ``Articles the product The duty provided
of the United Kingdom, in the applicable
as provided for in subheading +
U.S. note 28(a) to 25%''.
this subchapter and as
provided for in the
subheadings enumerated
in U.S. note 28(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''.
------------------------------------------------------------------------
HTSUS subheading Product description
------------------------------------------------------------------------
3213.90.00....................... Artists', students' or signboard
painters' colors, in tablets, tubes,
jars, bottles, pans or in similar
packings, not in sets.
3303.00.10....................... Floral or flower waters, not
containing alcohol.
3303.00.20....................... Perfumes and toilet waters, other
than floral or flower waters, not
containing alcohol.
3303.00.30....................... Perfumes and toilet waters,
containing alcohol.
3304.10.00....................... Lip make-up preparations.
3304.20.00....................... Eye make-up preparations.
3304.30.00....................... Manicure or pedicure preparations.
3304.91.00....................... Beauty or make-up powders, whether or
not compressed.
3304.99.10....................... Petroleum jelly put up for retail
sale.
3304.99.50....................... Beauty or make-up preparations &
preparations for the care of the
skin, excl. medicaments but incl.
sunscreen or sun tan preparations,
nesoi.
3305.10.00....................... Shampoos.
3305.20.00....................... Preparations for permanent waving or
straightening the hair.
3305.30.00....................... Hair lacquers.
3305.90.00....................... Preparations for use on the hair,
nesoi.
3306.90.00....................... Preparations for oral or dental
hygiene, including denture fixative
pastes and powders, excluding
dentifrices and yarn used to clean
between the teeth (dental floss).
3307.10.10....................... Pre-shave, shaving or after-shave
preparations, not containing
alcohol.
3307.10.20....................... Pre-shave, shaving or after-shave
preparations, containing alcohol.
3307.30.10....................... Bath salts, whether or not perfumed.
[[Page 30367]]
3307.30.50....................... Bath preparations, other than bath
salts.
3307.49.00....................... Preparations for perfuming or
deodorizing rooms, including
odoriferous preparations used during
religious rites, nesoi.
3307.90.00....................... Depilatories and other perfumery,
cosmetic or toilet preparations.
Nesoi.
4201.00.60....................... Saddlery and harnesses for animals
nesoi, (incl. traces, leads, knee
pads, muzzles, saddle cloths and
bags and the like), of any material.
6104.43.20....................... Women's or girls' dresses, knitted or
crocheted, of synthetic fibers,
nesoi.
6201.12.20....................... Men's or boys' overcoats, carcoats,
capes, & similar coats of cotton,
not knit or crocheted, not
containing 15% or more by wt of
down, etc.
6201.92.45....................... Men's or boys' anoraks, windbreakers
& sim articles nesoi, not knit/
crochet, cotton, not cont. 15% or
more by wt of down, etc, o/than rec
perf outwear.
6202.12.20....................... Women's or girls' overcoats,
carcoats, etc, not knitted or
crocheted, of cotton, not containing
15% or more by weight of down, etc.
6202.13.40....................... Women's or girls' overcoats,
carcoats, capes, cloaks and similar
articles, not knitted or crocheted,
of man-made fibers, nesoi.
6202.92.90....................... Women's/girls' anoraks, windbreakers
& similar articles, nt knit/crochet,
cotton, nt cont. 15% or more by wt
of down, etc, o/than rec perf
outwear.
6204.43.40....................... Women's or girls' dresses, not
knitted or crocheted, of synthetic
fibers, nesoi.
6204.44.40....................... Women's or girls' dresses, not
knitted or crocheted, of artificial
fibers, nesoi.
6204.49.10....................... Women's or girls' dresses, not
knitted or crocheted, containing 70%
or more by weight of silk or silk
waste.
6205.20.20....................... Men's or boys' shirts, not knitted or
crocheted, of cotton, nesoi.
6215.10.00....................... Ties, bow ties and cravats, not
knitted or crocheted, of silk or
silk waste.
6403.59.30....................... Footwear w/outer soles and uppers of
leather, not covering the ankle,
welt, nesoi.
6403.59.90....................... Footwear w/outer soles and uppers of
leather, not cov. ankle, n/welt, for
persons other than men, youths and
boys.
6403.91.30....................... Footwear w/outer soles of rubber/
plastics/composition leather &
uppers of leather, covering the
ankle, welt.
6403.99.60....................... Footwear w/outer soles of rubber/
plastics/comp. leather & uppers of
leather, n/cov. ankle, n/welt, for
men, youths and boys, nesoi.
6404.20.40....................... Footwear w/outer soles of leather/
comp. leath., n/o 50% by wt. rub./
plast. or rub./plast./text. & 10%+
by wt. rub./plast., val. o/$2.50/pr.
6903.90.00....................... Refractory ceramic goods (o/than of
siliceous fossil meals or earths),
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.
6907.30.90....................... Glazed ceramic mosaic cubes nesoi, o/
t subheading 6907.40.
6910.90.00....................... Ceramic (o/than porcelain or china)
sinks, washbasins, baths, bidets,
water closet bowls, urinals & siml.
sanitary fixtures.
7113.11.50....................... Silver articles of jewelry and parts
thereof, nesoi, valued over $18 per
dozen pieces or parts.
7113.19.29....................... Gold necklaces and neck chains (o/
than of rope or mixed links).
7113.19.50....................... Precious metal (o/than silver)
articles of jewelry and parts
thereo, whether or not plated or
clad with precious metal,nesoi.
7116.20.50....................... Precious stone articles,nesoi.
7117.19.90....................... Imitation jewelry (o/than toy jewelry
valued not over 8 cents per piece &
rope, curb, cable, chain, and
similar articles produced in
continuous lengths), of base metal
(wheth. or n/plated w/prec.metal),
nesoi.
8415.82.01....................... Air conditioning machines
incorporating a refrigerating unit,
nesoi.
8418.40.00....................... Freezers of the upright type, not
exceeding 900 liters capacity,
electric or other.
8418.50.00....................... Refrigerating or freezing display
counters, cabinets, showcases and
similar refrigerating or freezing
furniture.
8418.69.01....................... Refrigerating or freezing equipment
nesoi.
8532.24.00....................... Ceramic dielectric fixed capacitors,
multilayer.
9001.10.00....................... Optical fibers, optical fiber bundles
and cables, other than those of
heading 8544.
9401.71.00....................... Seats nesoi, w/metal frame (o/than of
heading 9402), upholstered.
9403.10.00....................... Furniture (o/than 9401 or 9402) of
metal nesoi, of a kind used in
offices.
9403.20.00....................... Furniture (o/than 9401 or 9402) of
metal nesoi, o/than of a kind used
in offices.
9403.40.90....................... Furniture (o/than 9401 or 9402) of
wood (o/than bentwood) nesoi, of a
kind used in the kitchen & not
designed for motor vehicl. Use.
9403.60.80....................... Furniture (o/than 9401 or 9402) of
wood (o/than bentwood) nesoi.
9403.89.60....................... Furniture (o/than 9401 or 9402) of
materials nesoi.
9503.00.00....................... Toys, including riding toys o/than
bicycles, puzzles, reduced scale
models.
9504.50.00....................... Video game consoles and machines,
other than those of heading 9504.30.
9504.90.40....................... Game machines (o/than coin- or token-
operated) and parts and accessories
thereof.
9504.90.60....................... Chess, checkers, backgammon, darts
and o/table and parlor games played
on boards of a special design and
parts thereof; poker chips and dice.
9504.90.90....................... Articles nesoi for arcade, table or
parlor games & parts & access.;
automatic bowling alley equipment &
parts and accessories thereof.
9508.10.00....................... Traveling circuses and traveling
menageries; parts and accessories
thereof.
9508.90.00....................... Merry-go-rounds, boat-swings,
shooting galleries and other
fairground amusements; traveling
theaters; parts and accessories
thereof.
9603.29.80....................... Shaving brushes, hair brushes, nail
brushes, eyelash and other toilet
brushes for use on the person (o/
than tooth brushes), valued o/40
cents each.
------------------------------------------------------------------------
[FR Doc. 2021-11862 Filed 6-4-21; 8:45 am]
BILLING CODE 3290-F1-P
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