Notice2021-25199
Termination of Actions in the Section 301 Digital Services Tax Investigations of Austria, France, Italy, Spain, and the United Kingdom and Further Monitoring
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Published
November 18, 2021
Issuing agencies
Trade Representative, Office of United States
Abstract
On October 8, 2021, Austria, France, Italy, Spain, and the United Kingdom joined the United States and 130 other jurisdictions participating in the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting in reaching a political agreement on a two-pillar solution to address tax challenges arising from the digitalization of the world economy. As part of Pillar 1, all parties agreed to remove existing Digital Services Taxes (DSTs) and other relevant similar measures, and to coordinate the withdrawal of these taxes. On October 21, 2021, the U.S. Department of the Treasury (Treasury) issued a joint statement with Austria, France, Italy, Spain, and the United Kingdom on a transitional approach to those countries' DSTs prior to entry into force of Pillar 1. The joint statement reflects a political agreement that DST liabilities accrued during the transitional period will be creditable in defined circumstances against future income taxes due under Pillar 1. Based on the commitments of Austria, France, Italy, Spain, and the United Kingdom to remove their DSTs pursuant to Pillar 1 and on their political agreement to the transitional approach prior to Pillar 1's entry into force, the U.S. Trade Representative has determined to terminate the section 301 actions taken in the respective investigations of these countries' DSTs. In coordination with Treasury, USTR will monitor implementation of the removal of these countries' DSTs as provided for under Pillar 1 and the transitional approach as provided in the joint statement.
Full Text
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<title>Federal Register, Volume 86 Issue 220 (Thursday, November 18, 2021)</title>
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[Federal Register Volume 86, Number 220 (Thursday, November 18, 2021)]
[Notices]
[Pages 64590-64591]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-25199]
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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Termination of Actions in the Section 301 Digital Services Tax
Investigations of Austria, France, Italy, Spain, and the United Kingdom
and Further Monitoring
AGENCY: Office of the United States Trade Representative (USTR).
ACTION: Notice.
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SUMMARY: On October 8, 2021, Austria, France, Italy, Spain, and the
United Kingdom joined the United States and 130 other jurisdictions
participating in the OECD/G20 Inclusive Framework on Base Erosion and
Profit Shifting in reaching a political agreement on a two-pillar
solution to address tax challenges arising from the digitalization of
the world economy. As part of Pillar 1, all parties agreed to remove
existing Digital Services Taxes (DSTs) and other relevant similar
measures, and to coordinate the withdrawal of these taxes. On October
21, 2021, the U.S. Department of the Treasury (Treasury) issued a joint
statement with Austria, France, Italy, Spain, and the United Kingdom on
a transitional approach to those countries' DSTs prior to entry into
force of Pillar 1. The joint statement reflects a political agreement
that DST liabilities accrued during the transitional period will be
creditable in defined circumstances against future income taxes due
under Pillar 1. Based on the commitments of Austria, France, Italy,
Spain, and the United Kingdom to remove their DSTs pursuant to Pillar 1
and on their political agreement to the transitional approach prior to
Pillar 1's entry into force, the U.S. Trade Representative has
determined to terminate the section 301 actions taken in the respective
investigations of these countries' DSTs. In coordination with Treasury,
USTR will monitor implementation of the removal of these countries'
DSTs as provided for under Pillar 1 and the transitional approach as
provided in the joint statement.
FOR FURTHER INFORMATION CONTACT: For questions concerning the actions,
please contact Benjamin Allen, Thomas Au, Patrick Childress, or Kate
Hadley, Assistant General Counsels at (202) 395-9439, (202) 395-0380,
(202) 395-9531, and (202) 395-3911, respectively, Robert Tanner,
Director, Services and Investment at (202) 395-6125, or Michael Rogers,
Director for Europe at (202) 395-2684.
SUPPLEMENTARY INFORMATION:
I. Proceedings in the Investigations
For background on the proceedings in the section 301 investigations
of DSTs adopted by Austria, France, Italy, Spain, and the United
Kingdom, please see prior notices including: 84 FR 34042 (July 16,
2019) (France); 84 FR 66956 (December 6, 2019) (France); 85 FR 43292
(July 16, 2020) (France); 85 FR 34709 (June 5, 2020) (Austria, Italy,
Spain, United Kingdom); 86 FR 2477 (January 12, 2021) (Italy); 86 FR
6406 (January 21, 2021) (Austria); 86 FR 6407 (January 21, 2021)
(Spain); 86 FR 6406 (January 21, 2021) (United Kingdom); 86 FR 16816
(Austria); 86 FR 16819 (Italy); 86 FR 16813 (Spain); and 86 FR 16829
(United Kingdom).
In January 2021, the U.S. Trade Representative indefinitely
suspended the section 301 action in the investigation of France's DST
in light of the ongoing DST investigations of other jurisdictions. 86
FR 2479 (January 12, 2021). On June 2, 2021, the U.S. Trade
Representative determined to take action in the form of additional
duties on certain products of Austria, Italy, Spain, and the United
Kingdom, and to immediately suspend those additional duties for up to
180 days. 86 FR 30361 (June 7, 2021) (Austria); 86 FR 30350 (June 7,
2021) (Italy); 86 FR 30358 (June 7, 2021) (Spain); 86 FR 30364 (June 7,
2021) (United Kingdom).
II. OECD/G20 Negotiations
One-hundred forty-one jurisdictions are engaged in international
tax negotiations under the OECD/G20 Inclusive Framework on Base Erosion
and Profit Shifting. On October 8, 2021, Austria, France, Italy, Spain,
and the United Kingdom joined the United States and 130 other
participants in reaching political agreement on a Statement on a Two-
Pillar Solution to Address the Tax Challenges Arising from the
Digitalisation of the Economy. OECD/G20 Base Erosion and Profit
Shifting Project, Statement on a Two-Pillar Solution to Address the Tax
Challenges Arising from the Digitalisation of the Economy (Oct. 8,
2021) at <a href="https://www.oecd.org/tax/beps/statement-on-a-two-pillar-solution-to-address-the-tax-challenges-arising-from-the-digitalisation-of-the-economy-october-2021.pdf">https://www.oecd.org/tax/beps/statement-on-a-two-pillar-solution-to-address-the-tax-challenges-arising-from-the-digitalisation-of-the-economy-october-2021.pdf</a> (the OECD/G20 Two-Pillar Solution). The
statement provides that Pillar 1 will be implemented through a
multilateral convention. With respect to DSTs, the statement provides:
The Multilateral Convention (MLC) will require all parties to
remove all Digital Services Taxes and other relevant similar measures
with respect to all companies, and to commit not to introduce such
measures in the future. No newly enacted Digital Services Taxes or
other relevant similar measures will be imposed on any company from 8
October 2021 and until the earlier of 31 December 2023 or the coming
into force of the MLC. The modality for the removal of existing Digital
Services Taxes and other relevant similar measures will be
appropriately coordinated.
III. Joint Statement
On October 21, 2021, the United States, Austria, France, Italy,
Spain, and the United Kingdom issued a joint statement that describes a
political compromise reached among these countries on a transitional
approach to existing Unilateral Measures while implementing Pillar 1.
Joint Statement from the United States, Austria, France, Italy, Spain,
and the United Kingdom
[[Page 64591]]
Regarding a Compromise on a Transitional Approach to Existing
Unilateral Measures During the Interim Period Before Pillar 1 is in
Effect, U.S. Dep't of the Treas. (Oct. 21, 2021) at <a href="https://home.treasury.gov/news/press-releases/jy0419">https://home.treasury.gov/news/press-releases/jy0419</a>. Under the transitional
approach in the joint statement, DST liability that accrues during the
transitional period prior to implementation of Pillar 1 will be
creditable in defined circumstances against future income taxes due
under Pillar 1. In return, the United States commits to terminating the
existing section 301 trade actions on goods of Austria, France, Italy,
Spain, and the United Kingdom, and not to impose further trade actions
against Austria, France, Italy, Spain, and the United Kingdom with
respect to their existing DSTs until the earlier of the date the Pillar
1 multilateral convention comes into force or December 31, 2023.
IV. Termination of Action
Section 307 of the Trade Act of 1974, as amended (Trade Act) (19
U.S.C. 2417), provides that ``[t]he Trade Representative may modify or
terminate any action, subject to the specific direction, if any, of the
President with respect to such action, that is being taken under
section [301] of this title if . . . such action is being taken under
section [301(b)] of this title and is no longer appropriate.'' The U.S.
Trade Representative has found that that the political agreement of
Austria, France, Italy, Spain, and the United Kingdom to the OECD/G20
Two-Pillar Solution, which provides for the removal of DSTs upon entry
into force of Pillar 1, and the transitional approach in the joint
statement, provide a satisfactory resolution of the matters covered by
the section 301 DST investigations of Austria, France, Italy, Spain,
and the United Kingdom. Accordingly, pursuant to section 307 of the
Trade Act, the U.S. Trade Representative has determined that the
suspended trade actions in these investigations are no longer
appropriate and that these actions should be terminated.
The U.S. Trade Representative's determination was made in
consultation with Treasury and considers the advice of the interagency
Section 301 Committee, consultations with representatives of the
domestic industry concerned, and public comments and advisory committee
advice received during the investigations.
In order to implement the termination of the section 301 actions in
the DST investigations of Austria, France, Italy, Spain, and the United
Kingdom, subchapter III of chapter 99 of the Harmonized Tariff Schedule
of the United States (HTSUS) is modified by the Annex to this notice.
V. Ongoing Monitoring
Section 306(a) of the Trade Act (19 U.S.C. 2416(a)) provides that
``[t]he Trade Representative shall monitor the implementation of each
measure undertaken, or agreement that is entered into, by a foreign
country to provide a satisfactory resolution of a matter subject to
investigation. . . .'' Section 306(b) (19 U.S.C. 2416(b)) provides that
``[i]f, on the basis of the monitoring carried out under subsection
(a), the Trade Representative considers that a foreign country is not
satisfactorily implementing a measure or agreement referred to in
subsection (a), the Trade Representative shall determine what further
action the Trade Representative shall take under section [301(a)].''
Pursuant to section 306(a) of the Trade Act, the U.S. Trade
Representative, in coordination with Treasury, will monitor the
implementation of the political agreement on an OECD/G20 Two-Pillar
Solution as pertaining to DSTs, the commitments under the joint
statement, and associated measures. Pursuant to section 306(b) of the
Trade Act, if the U.S. Trade Representative, in consultation with
Treasury, subsequently considers that Austria, France, Italy, Spain, or
the United Kingdom is not satisfactorily implementing these political
agreements or associated measures, then the U.S. Trade Representative
will consider further action under section 301.
Annex
The U.S. Trade Representative has decided to terminate:
(1) The additional duties under heading 9903.90.01 of the HTSUS on
articles the product of France, as provided for in U.S. notes 22(a) and
22(b) to subchapter III of chapter 99 of the HTSUS.
(2) the additional duties under heading 9903.90.02 of the HTSUS on
articles the product of Austria, as provided for in U.S. notes 23(a)
and 23(b) to subchapter III of chapter 99 of the HTSUS.
(3) the additional duties under heading 9903.90.04 of the HTSUS on
articles the product of Italy, as provided for in U.S. notes 25(a) and
25(b) to subchapter III of chapter 99 of the HTSUS.
(4) the additional duties under heading 9903.90.05 of the HTSUS on
articles the product of Spain, as provided for in U.S. notes 26(a) and
26(b) to subchapter III of chapter 99 of the HTSUS.
(5) additional duties under heading 9903.90.07 of the HTSUS on
articles the product of the United Kingdom, as provided for in U.S.
notes 28(a) and 28(b) to subchapter III of chapter 99 of the HTSUS.
The termination of these additional duties is effective on the date
this determination is published in the Federal Register.
In accordance with these determinations, the U.S. Trade
Representative has determined to modify the HTSUS:
(1) By deleting U.S. notes 22(a), 22(b), 23(a), 23(b), 25(a),
25(b), 26(a), 26(b), 28(a) and 28(b) to subchapter III of chapter 99 of
the HTSUS.
(2) by deleting HTSUS headings 9903.90.01, 9903.90.02, 9903.90.04,
9903.90.05 and 9903.90.07.
The modifications of the HTSUS are effective on the date this
determination is published in the Federal Register.
Any provisions of previous notices issued in these investigations
that are inconsistent with this notice are superseded to the extent of
such inconsistency.
Greta Peisch,
General Counsel, Office of the United States Trade Representative.
[FR Doc. 2021-25199 Filed 11-17-21; 8:45 am]
BILLING CODE 3290-F2-P
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