Termination of Actions in the Section 301 Digital Services Tax Investigations of Austria, France, Italy, Spain, and the United Kingdom and Further Monitoring, 64590-64591 [2021-25199]

Agencies

• Office of the United States Trade Representative

[Federal Register Volume 86, Number 220 (Thursday, November 18, 2021)]
[Notices]
[Pages 64590-64591]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[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 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 (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 https://home.treasury.gov/news/press-releases/jy0419. 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