US proposes tit-for-tat tariffs over e-commerce tax

WASHINGTON/NEW DELHI: The United States Trade Representative (USTR) has proposed retaliatory trade actions against India and certain other countries that have imposed or are considering equalisation levy/digital services tax on e-commerce firms.
It has issued notices seeking public comments on proposed trade actions against six countries, including India. A USTR statement said it “is proceeding with the public notice and comment process on possible trade actions to preserve procedural options before the conclusion of the statutory one-year time period for completing the investigations”.
According to a USTR document pertaining to India, it has requested “written comments regarding a potential trade action in connection with the Section 301 investigation of India’s digital services tax”.
On this, sources in the government on Saturday said India will examine the proposed action with the stakeholders concerned and would take suitable measures, keeping in mind the trade and commercial interest of the country and overall interest of its people.
In June 2020, the US initiated an investigation under Section 301 of the US Trade Act, 1974 against the taxation on digital services adopted or under consideration by India, Italy, Turkey, UK, Spain and Austria.
The report of this investigation in January this year concluded that India’s equalisation levy, by its structure and operation, discriminates against US digital companies. It was strongly opposed by India.
USTR Katherine Tai has stated that the US is committed to working with its trading partners to resolve its concerns with digital services taxes and address broader issues of international taxation. “However, until such a consensus is reached, we will maintain our options under the Section 301 process, including, if necessary, the imposition of tariffs,” Tai said.

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