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Trump Threatens ‘100% TARIFF’ on Countries Who Levy Digital Services Tax on U.S. Companies
President Donald Trump used his favorite threat, a tariff, against countries that levy a digital service tax against American companies.
Trump made the threat on his social media platform Truth Social on Friday.
“Numerous European Countries have been discussing the imminent implementation of a Digital Services Tax on American Companies. Some of these Countries are close to actually doing this. Please let this statement serve to represent that any Country that imposes such a Tax will immediately be met with a 100% TARIFF on any and all Goods sent to the United States of America. This TARIFF will supersede Trade Deals made with the Country, whether implemented, signed, or not. Additionally, the 100% TARIFF will be immediately imposed, if they proceed. Thank you for your attention to this matter,” Trump wrote.
READ MORE: Senate Dems Give Trump Administration 90 Days to Refund Tariffs
This is not the first time Trump has threatened a tariff over a digital services tax. Earlier this month, he threatened French exporters with a 100% tariff on wine and champagne.
“I asked [French President Emmanuel Macron] not to charge American companies, and if they do, I have no choice but to charge a 100% tariff on all champagnes and all wines coming out of France,” Trump told The New York Post. “All he has to do is get rid of the sales tax, and he wouldn’t have that kind of pressure.”
Digital service taxes are a way to tax income on companies without a physical presence in a country, but do business there via the internet, according to Public Citizen. It’s a tax on gross revenue earned from users in a specific country. As an example, if someone in Freedonia buys a book off Amazon.com, a DST would cause Amazon to pay income tax to Freedonia based off that sale. (Amazon does not have a presence in Freedonia on account of it being a made-up country from the film Duck Soup.)
A number of countries have or are considering implementing digital service taxes, and not just in Europe. Canada had one until recently, but it was repealed earlier this year. The Organisation for Economic Co-operation and Development has been organizing a proposal, Pillar One, which would set up a international DST across its more than 130 member nations.
Though Pillar One has not yet been enacted, a number of European countries have implemented DSTs, including Poland, Hungary, Denmark and Portugal. Many other countries, including France, the United Kingdom, Turkey, Spain, Italy and Austria have DSTs that will be repealed should Pillar One become law, according to the Tax Foundation. In France, for example, big tech companies pay 3% based on gross revenue earned from the country, earning the nation $700 million last year, according to Quartz.
Image via Reuters
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