UK, France, Italy, Austria and Spain announce repeal of digital services tax
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UK, France, Italy, Austria and Spain announce repeal of digital services tax

A joint statement from the United Kingdom, France, Italy, Austria, and Spain was released Thursday announcing that there would be a repeal of their ‘Digital Services Taxes’ (DSTs).

This follows an agreement with the five countries and the Department of the Treasury in conjunction with the OECD in relation to section 301 tariffs relating to digital service tax. In the repealed agreement, the European countries will implement the existing ‘Unilateral Measures’ during an interim period.

The section 301 tariffs will affect France’s handbags, Austria’s glassware, and beauty products from the UK. The press statement also addressed the Transitional period. Additional requirements for a year after Pillar 1 takes effect will require the countries involved to credit any excess tax from the Pillar 1 amount against the portion of the corporate income tax liability.

The full implementation of DSTs in a global tax agreement will come into force in 2023. However, it is expected that the countries will keep their own unilateral measures for DSTs until then. The United States Trade Representative (USTR) aims to work with the five governments to oversee the implementation of the agreement. The USTR investigation began in June 2020 and had initially covered additional countries such as India and Turkey, but they chose not to join the agreement.