U.S. Trade Representative Katherine Tai told Turkey’s trade minister it was critical that countries remove individual digital services taxes in connection with a broader multilateral agreement reached in talks led by the Organisation for Economic Co-operation and Development (OECD), her office said.
Tai discussed digital services taxes, improving access for U.S. companies in Turkey and other issues with her Turkish counterpart, Mehmet Muş, during a virtual meeting on Wednesday, her office said in a statement released on Thursday.
"Ambassador Tai stated that the United States views as critical the removal of individual DSTs in connection with the Organization for Economic Co-operation and Development (OECD) and G-20 processes," it said.
She expressed her view that negotiations in multilateral forums represent the best opportunity to resolve issues around digital services taxes.
More than 130 OECD members agreed this summer to work out new rules on where companies are taxed, to adopt a tax rate of at least 15% and to drop national digital services taxes in favor of the new taxing rights.
G-20 leaders are trying to finalize the deal by an Oct. 28-29 summit in Rome.
The U.S. Trade Representative’s office in June announced 25% tariffs on over $2 billion (TL 16.78 billion) worth of imports from six countries over their digital services taxes – including Turkey – but immediately suspended the duties to allow time for international tax negotiations to continue.
USTR said it would impose 25% tariffs on about $887 million worth of goods from Britain, including clothing, overcoats, footwear and cosmetics, and on about $386 million worth of goods from Italy, including clothing, handbags and optical lenses.
Other countries included Britain, Italy, Spain, India and Austria. USTR aimed to impose tariffs on goods worth $887 billion from Britain, $386 million from Italy, $323 million from Spain, $310 million from Turkey, $118 million from India and $65 million from Austria.
The potential tariffs, based on 2019 import data, aimed to equal the amount of digital taxes that would be collected from U.S. firms.
The U.S. government has concluded that such individual taxes would discriminate against U.S. companies.
The nations are imposing taxes on online giants, including Google, Amazon, Facebook and Apple amid efforts to make U.S. multinationals pay a larger share of their revenues in taxes in the countries where they operate.
With the law that went into effect in March last year, Turkey applies a 7.5% tax to revenues on digital advertising and content.
The tax includes all manners of online advertisements and services that allow any digital content to be listened to, watched or downloaded.
The tax applies to companies generating 750 million euros ($882.75 million) or more in global revenues and TL 20 million ($2.38 million) or more in revenues in Turkey from covered digital services.
During their meeting, Tai and Muş also discussed tackling challenges posed by non-market economies, with a particular focus on excess capacity, and efforts to reform the World Trade Organization (WTO), USTR said.
Boost bilateral trade
A separate statement by the Turkish Trade Ministry said the top trade officials discussed areas of cooperation and efforts to further increase the bilateral trade volume.
Muş and Tai agreed to increase bilateral dialogue and expand cooperation in various fields, read the statement.
The two sides underlined the importance of raising the trade target much higher, stressing their expectations from each other in various areas, especially in market access.
Muş raised Turkey's demand for the elimination of additional taxes applied by the U.S. in the steel industry, pointing out the consultation processes carried out within the OECD.
He said Turkey will continue to work with the U.S. on bilateral and multilateral platforms to further increase trade volume, which Muş said would reach around $25 billion by the end of this year.
Muş also proposed the establishment of a joint working group and invited the U.S. trade representative to Turkey.