Title: Expressing strong opposition to the imposition of digital services taxes by other countries that discriminate against United States companies.
Policy area: Foreign Trade and International Finance

Summary:
This resolution supports investigations into digital services taxes (i.e., taxes imposed by a foreign government on companies providing digital services in that country), and it calls on relevant U.S. agencies to use all available methods and resources to protect U.S. companies from the discriminatory effects of these taxes.
Further, it calls on all countries to continue working toward consensus with the Organisation for Economic Co-operation and Development to address the tax challenges of a global, digitized economy, and it expresses commitment to free and fair trade between the United States and other countries.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H. Res. 1097 Introduced in House (IH)]

<DOC>






116th CONGRESS
  2d Session
H. RES. 1097

  Expressing strong opposition to the imposition of digital services 
   taxes by other countries that discriminate against United States 
                               companies.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 1, 2020

    Mr. Estes (for himself and Mr. Kildee) submitted the following 
resolution; which was referred to the Committee on Ways and Means, and 
  in addition to the Committee on Foreign Affairs, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                               RESOLUTION


 
  Expressing strong opposition to the imposition of digital services 
   taxes by other countries that discriminate against United States 
                               companies.

Whereas a digital services tax (DST) is a tax levied by a government on a 
        company that provides a digital service to a person or company of that 
        country;
Whereas many companies that provide digital services are not physically located 
        in the countries where the people that use the company's services 
        reside;
Whereas, under current international income tax and trade agreements, 
        multinational companies are subject to taxation in the country where 
        production of the good or service occurs rather than in the country 
        where the good or service is sold or used;
Whereas certain countries have developed DSTs that deviate from this 
        international income tax system that are discriminatory to United 
        States-based companies and threatens the success of United States 
        companies and workers and their competitiveness in these international 
        markets;
Whereas many countries, including France and others, have already implemented a 
        DST;
Whereas the Organisation for Economic Co-operation and Development (OECD) has 
        hosted multilateral negotiations with 144 countries to propose a 
        framework for updating global tax rules and address the concerns of some 
        countries about digital economy taxation on a multilateral basis, and 
        the United States is participating in these negotiations;
Whereas the international tax treaty network promotes American prosperity by 
        facilitating international trade and allows United States businesses and 
        consumers to avoid double taxation;
Whereas, on July 24, 2019, France passed legislation that retroactively levied a 
        DST beginning January 1, 2019;
Whereas section 302(b)(1)(A) of the Trade Act of 1974 authorizes the United 
        States Trade Representative to initiate an investigation to determine 
        whether an act, policy, or practice of a foreign country is actionable 
        under section 301 of the Trade Act of 1974;
Whereas actionable matters under section 301 of the Trade Act of 1974 include, 
        inter alia, acts, policies, and practices of a foreign country that are 
        unreasonable or discriminatory and burden or restrict United States 
        commerce;
Whereas an act, policy, or practice is unreasonable if the act, policy, or 
        practice, while not necessarily in violation of, or inconsistent with, 
        the international legal rights of the United States, is otherwise unfair 
        and inequitable;
Whereas in response to France's DST, the United States Trade Representative 
        (USTR) published the ``Report on France's Digital Services Tax Prepared 
        in the Investigation under Section 301 of the Trade Act of 1974'' on 
        December 2, 2019;
Whereas the report made five main findings, including--

    (1) that ``the evidence collected in this investigation indicates that 
the French DST is intended to, and by its structure and operation does, 
discriminate against U.S. digital companies'';

    (2) that ``the evidence collected in this investigation indicates that 
the French DST's retroactive application is unusual and inconsistent with 
prevailing tax principles and renders the tax particularly burdensome for 
covered U.S. companies, which will also affect their customers, including 
U.S. small businesses and consumers'';

    (3) that ``the evidence collected in this investigation indicates that 
the French DST's application to gross revenue rather than income 
contravenes prevailing tax principles and imposes significant additional 
burdens on covered U.S. companies'';

    (4) that ``the evidence collected in this investigation indicates that 
the French DST's application to revenues unconnected to a presence in 
France contravenes prevailing international tax principles and is 
particularly burdensome for covered U.S. companies''; and

    (5) that ``the evidence collected in this investigation indicates that 
the French DST's application to a small group of digital companies 
contravenes international tax principles counseling against targeting the 
digital economy for special, unfavorable tax treatment'';

Whereas, in light of concerns with the DSTs adopted or under consideration by 
        foreign countries, on June 2, 2020, the United States Trade 
        Representative initiated section 301 investigations with respect to DSTs 
        adopted or under consideration by Austria, Brazil, the Czech Republic, 
        the European Union, India, Indonesia, Italy, Spain, Turkey, and the 
        United Kingdom;
Whereas, pursuant to section 303(a) of the Trade Act of 1974, the United States 
        Trade Representative has requested consultations with the governments of 
        these jurisdictions; and
Whereas the United States Government has many options to oppose DSTs, including 
        intensive bilateral engagement, withdrawal of trade preference programs, 
        World Trade Organization dispute settlement, or imposing duties, fees, 
        import restrictions, or taxes on the goods or services of countries that 
        unfairly target United States companies: Now, therefore, be it
    Resolved, That the House of Representatives--
            (1) is committed to free and fair trade between the United 
        States and other countries;
            (2) agrees with the findings of the report issued by the 
        United States Trade Representative on December 2, 2019, that 
        concludes that the French digital services tax (DST) 
        discriminates against United States companies and is in 
        violation of existing international income tax and trade 
        agreements;
            (3) supports the Office of the United States Trade 
        Representative for continuing its investigations into 
        discriminatory DSTs through its notice of investigations issued 
        on June 2, 2020;
            (4) calls on all other countries to cease and desist from 
        implementing any DST, and to immediately stop unfairly 
        targeting United States companies;
            (5) calls on all countries to continue to work towards 
        consensus with the Organisation for Economic Co-operation and 
        Development (OECD) to address the tax challenges of a global, 
        digitalized economy; and
            (6) calls on the relevant United States Government agencies 
        to use all available methods and resources to protect United 
        States companies from the discriminatory effects of DSTs.
                                 <all>