Notice2021-26116
Termination of Action in the Section 301 Digital Services Tax Investigation of Turkey and Further Monitoring
Primary source
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Published
December 1, 2021
Issuing agencies
Trade Representative, Office of United States
Abstract
On October 8, 2021, Turkey joined the United States and 134 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 and other relevant similar measures, and to coordinate the withdrawal of these taxes. On November 22, 2021, the U.S. Department of the Treasury (Treasury) issued a joint statement with Turkey regarding a transitional approach to Turkey's Digital Service Tax (DST) 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 taxes due under Pillar 1. Based on the commitment of Turkey to remove its DST pursuant to Pillar 1 and on Turkey's 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 action taken in the investigation of Turkey's DST. In coordination with Treasury, USTR will monitor implementation of the removal of Turkey's DST 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 228 (Wednesday, December 1, 2021)</title>
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[Federal Register Volume 86, Number 228 (Wednesday, December 1, 2021)]
[Notices]
[Pages 68295-68297]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-26116]
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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Termination of Action in the Section 301 Digital Services Tax
Investigation of Turkey and Further Monitoring
AGENCY: Office of the United States Trade Representative (USTR).
ACTION: Notice.
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SUMMARY: On October 8, 2021, Turkey joined the United States and 134
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 and other relevant
similar measures, and to coordinate the
[[Page 68296]]
withdrawal of these taxes. On November 22, 2021, the U.S. Department of
the Treasury (Treasury) issued a joint statement with Turkey regarding
a transitional approach to Turkey's Digital Service Tax (DST) 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 taxes due
under Pillar 1. Based on the commitment of Turkey to remove its DST
pursuant to Pillar 1 and on Turkey's 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 action
taken in the investigation of Turkey's DST. In coordination with
Treasury, USTR will monitor implementation of the removal of Turkey's
DST as provided for under Pillar 1 and the transitional approach as
provided in the joint statement.
DATES: The additional duties on products of Turkey are terminated as of
November 28, 2021.
FOR FURTHER INFORMATION CONTACT: For questions concerning this notice,
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 Investigation
For background on the proceedings in the section 301 investigation
of Turkey's DST, please see prior notices including: 85 FR 34709 (June
5, 2020); 86 FR 2480 (January 12, 2021); 86 FR 16822 (March 31, 2021);
and 86 FR 30353 (June 7, 2021).
On June 2, 2021, the U.S. Trade Representative determined to take
action in the form of additional duties on certain products of Turkey
and to immediately suspend those additional duties for up to 180 days.
86 FR 30353 (June 7, 2021).
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, Turkey joined the United
States and 134 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 November 22, 2021, the United States and Turkey issued a joint
statement that describes a political compromise reached on a
transitional approach to existing Unilateral Measures while
implementing Pillar 1. Joint Statement from the United States and
Turkey 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. (Nov. 22, 2021) at <a href="https://home.treasury.gov/news/press-releases/jy0500">https://home.treasury.gov/news/press-releases/jy0500</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 taxes due under
Pillar 1. See id. (citing Joint Statement from the United States,
Austria, France, Italy, Spain, and the United Kingdom 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>). In return, the United States commits to terminating
the existing section 301 trade action on goods of Turkey, and not to
impose further trade actions against Turkey with respect to its
existing DST until the earlier of the date the Pillar 1 multilateral
convention comes into force or December 31, 2023. Id.
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
Turkey 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 investigation of Turkey's DST.
Accordingly, pursuant to section 307 of the Trade Act, the U.S. Trade
Representative has determined that the suspended trade action in this
investigation is no longer appropriate and that the action 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 investigation.
In order to implement the termination of the section 301 action in
the investigation of Turkey's DST, 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
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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 Turkey 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 the
additional duties under heading 9903.90.06 of the HTSUS on articles the
product of Turkey, as provided for in U.S. notes 27(a) and 27(b) to
subchapter III of chapter 99 of the HTSUS. The termination of these
additional duties is effective on November 28, 2021.
In accordance with this determination, the U.S. Trade
Representative has determined to modify the HTSUS by: (1) Deleting U.S.
notes 27(a) and 27(b) to subchapter III of chapter 99 of the HTSUS; and
(2) by deleting HTSUS heading 9903.90.06. The modifications of the
HTSUS are effective on November 28, 2021. Any provisions of previous
notices issued in this investigation 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. 2021-26116 Filed 11-30-21; 8:45 am]
BILLING CODE 3290-F2-P
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