U.S. retaliates against Britain over digital service tax dispute

The Biden administration has threatened to impose a 25% tariff on UK exports to the United States in retaliation for the UK’s Digital Services Tax (DST) on major tech companies that came into effect on April 1.

Its purpose is to raise around £ 236m ($ 325m) annually. This is the estimated amount of damage incurred by DST in the United Kingdom.

Clothing and shoes, pottery, beauty products, gold and jewelry, furniture, robotics and refrigerators are all affected.

This is part of an effort to resolve the long-running Atlantic slave trade dispute over aerospace subsidies between Boeing and Airbus, with the United States suspending multi-million dollar tariffs on British exports, including Scotch whiskey. It was a few weeks after I agreed to do it.

Adam Mansell, CEO of the British Fashion and Textiles Association, said:

“When we are about to start discussing a UK-US trade deal, it is very important for both governments to avoid the table to remove this threat as soon as possible. The industry is still affected by COVID-19. Suffering and understanding the new trade deal with the EU, the additional burden on exports did not come at its worst. “

DST, led by Prime Minister Rishi Sunak, will add a 2% tax, primarily from the United States, to revenues from certain search engines, social media platforms, and online marketplaces. DST applies only to companies with digital services revenues in excess of $ 500 million and UK digital services revenues in excess of £ 25 million ($ 34.6 million).

Technology giants Google, Amazon, Facebook, Apple and eBay are all affected. Most of these are based in the United States. Amazon, Google, and Apple say they pass on costs to their customers.

“Like many countries around the world, we want to ensure that tech companies pay a fair tax burden. Our Digital Services Tax (DST) is rational, proportional and discriminatory. Not targeted, and temporary. We are actively working with the United States and other international partners to find a global solution to this problem and remove DST once it is implemented. “More,” a British government spokesman told the BBC.

US tariffs are “Section 301A survey of countries discriminating against US digital companies that have placed a burden on US companies, inconsistent with the principles of international taxation. It was implemented by the Trump administration in 2020 and came into effect by the Biden administration. Austria, India, Italy, Spain and Turkey are also covered by this measure.

A hearing by the Office of the United States Trade Representative will take place on April 21st.

The Associated Press contributed to this report.