Notice of Action in the Section 301 Investigation of Austria's Digital Services Tax, 30361-30364 [2021-11856]

Agencies

• Office of the United States Trade Representative

[Federal Register Volume 86, Number 107 (Monday, June 7, 2021)]
[Notices]
[Pages 30361-30364]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-11856]


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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

[Docket Number USTR-2021-0002]


Notice of Action in the Section 301 Investigation of Austria'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 Austria'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 
Austria 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 
Austria 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 [email protected].

SUPPLEMENTARY INFORMATION: 

I. Proceedings in the Investigation

    Austria has adopted a DST that imposes a 5 percent tax on gross 
revenues from digital advertising services provided in Austria. The DST 
applies only to companies with annual global revenues of [euro]750 
million or more, and annual revenues from digital advertising services 
in Austria of [euro]25 million or more. On June 2, 2020, the U.S. Trade 
Representative initiated an investigation of Austria'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 Austria's DST: Discrimination against U.S. companies; 
retroactivity; and possibly unreasonable tax policy. With respect to

[[Page 30362]]

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 
www.regulations.gov in docket number USTR-2020-0022.
    Under section 303 of the Trade Act, the U.S. Trade Representative 
requested consultations with the government of Austria regarding the 
issues involved in the investigation. Consultations were held on 
December 21, 2020. Based on information obtained during the 
investigation, USTR prepared a comprehensive report on Austria's DST, 
which is posted on the USTR website at https://ustr.gov/issue-areas/enforcement/section-301-investigations/section-301-digital-services-taxes. The report includes a full description of Austria's DST, and 
supports findings that Austria'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 
Austria'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 Austria to be drawn from a list of 40 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 
held on May 3 and May 6, 2021, and interested persons filed written 
comments. Transcripts from the hearings are available on the USTR 
website at: https://ustr.gov/issue-areas/enforcement/section-301-investigations/section-301-digital-services-taxes. The written public 
submissions are available at: https://comments.ustr.gov/s/docket?docketNumber=USTR-2021-0002 and https://comments.ustr.gov/s/docket?docketNumber=USTR-2021-0008.

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 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 Austria specified in 
Annex A to this notice. Annex A contains a list of 23 tariff 
subheadings, with an estimated trade value for calendar year 2019 of 
approximately $65 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 
Austria's DST and the amount of taxes assessed by Austria on U.S. 
companies. Estimates indicate that the value of the DST payable by 
U.S.-based company groups to Austria will be up to approximately $45 
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 
Austria and the estimates of the amount of taxes assessed by Austria.
    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 
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 9903.90.02 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 Austria, and may adopt appropriate modifications. If a 
modification to the action may be appropriate, the U.S. Trade 
Representative will consider the

[[Page 30363]]

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 23(a) and 23(b) to 
subchapter III of chapter 99 in numerical sequence:
    ``23 (a) For the purposes of heading 9903.90.02, products of 
Austria, as specified in this note, shall be subject to additional 
duties as provided herein. All products of Austria that are classified 
in the subheadings enumerated in this note are subject to the 
additional duties imposed by heading 9903.90.02. The duties imposed by 
heading 9903.90.02 shall be in addition to the general duty rates 
provided for in the applicable provisions of the tariff schedule.
    Products of Austria 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 9903.90.02, 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 9903.90.02 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 Austria 
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 Austria that are provided for in heading 9903.90.02 and 
classified in one of the subheadings enumerated in note 23(b) to this 
subchapter shall continue to be subject to antidumping, countervailing 
or other duties (including duties imposed by 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 9903.90.02 shall apply to all products of Austria that 
are classified in the subheadings enumerated below:

6903.20.00
7013.22.50
7013.28.20
7013.28.50
7013.28.60
7013.37.20
7013.37.60
7013.41.50
7013.49.60
7013.91.50
7019.90.10
7019.90.50
7403.29.01
8418.10.00
9003.11.00
9005.10.00
9005.80.40
9005.80.60
9010.60.00
9012.10.00
9015.40.80
9015.80.20
9027.50.80''.

    2. by inserting the following new heading 9903.90.02 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:

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                                                                               Rates of duty
                                                         -------------------------------------------------------
       Heading/subheading          Article description                      1
                                                         ---------------------------------------        2
                                                                General            Special
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``9903.90.02...................  ``Articles the product   The duty provided
                                  of Austria, as           in the applicable
                                  provided for in U.S.     subheading +
                                  note 23(a) to this       25%''.
                                  subchapter and as
                                  provided for in the
                                  subheadings enumerated
                                  in U.S. note 23(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''.

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         HTSUS subheading                   Product description
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6903.20.00.......................  Refractory ceramic goods (o/than of
                                    siliceous fossil meals or earths),
                                    nesoi, cont. by wt. o/50% alumina or
                                    mix. or comp. of Al2O3 & SiO2.
7013.22.50.......................  Stemware drinking glasses of lead
                                    crystal, valued over $5 each.
7013.28.20.......................  Stemware, o/than of pressed and
                                    toughened glass, o/than lead
                                    crystal, valued o/$0.30 but n/over
                                    $3 each.
7013.28.50.......................  Stemware, o/than of pressed and
                                    toughened glass, o/than lead
                                    crystal, not cut or engraved, valued
                                    o/$3 but n/over $5 each.
7013.28.60.......................  Stemware, o/than of pressed and
                                    toughened glass, o/than lead
                                    crystal, not cut or engraved, valued
                                    over $5 each.
7013.37.20.......................  Drinking glasses, nesoi, o/than of
                                    pressed and toughened glass, o/than
                                    lead crystal, valued o/$0.30 but n/
                                    over $3 each.
7013.37.60.......................  Drinking glasses, nesoi, o/than of
                                    pressed and toughened glass, o/than
                                    lead crystal, not cut or engraved,
                                    valued over $5 each.
7013.41.50.......................  Glassware for table or kitchen
                                    purposes (o/than drinking glasses),
                                    of lead crystal, valued over $5
                                    each.
7013.49.60.......................  Glassware for table or kitchen
                                    purposes (o/than drinking glasses),
                                    nesoi, n/cut or engraved, valued
                                    over $5 each.
7013.91.50.......................  Glassware for toilet/office/indoor
                                    decor. & similar purposes, of lead
                                    crystal, valued over $5 each.
7019.90.10.......................  Woven glass fiber articles (other
                                    than fabrics), nesoi.

[[Page 30364]]

 
7019.90.50.......................  Glass fibers (including glass wool),
                                    nesoi, and articles thereof, nesoi.
7403.29.01.......................  Copper alloys (o/than copper-zinc,
                                    copper-tin alloys), unwrought nesoi.
8418.10.00.......................  Combined refrigerator-freezers,
                                    fitted with separate external doors,
                                    electric or other.
9003.11.00.......................  Frames and mountings, of plastics,
                                    for spectacles, goggles or the like.
9005.10.00.......................  Binoculars.
9005.80.40.......................  Optical telescopes, including
                                    monoculars.
9005.80.60.......................  Monoculars and astronomical
                                    instruments other than binoculars
                                    and optical telescopes but not
                                    including instruments for radio-
                                    astronomy.
9010.60.00.......................  Projection screens.
9012.10.00.......................  Microscopes other than optical
                                    microscopes; diffraction apparatus.
9015.40.80.......................  Photogrammetrical surveying
                                    instruments and appliances, other
                                    than electrical.
9015.80.20.......................  Optical surveying, hydrographic,
                                    oceanographic, hydrological,
                                    meteorological or geophysical
                                    instruments and appliances, nesoi.
9027.50.80.......................  Nonelectrical instruments and
                                    apparatus using optical radiations
                                    (ultraviolet, visible, infrared),
                                    nesoi.
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[FR Doc. 2021-11856 Filed 6-4-21; 8:45 am]
BILLING CODE 3290-F1-P