The Dangers of Digital Services Taxes, With Clete Willems

There has been a global consensus for nearly a century that
countries should tax multinational companies in the jurisdictions
where they create value, not where they generate sales. But that
consensus has begun to fall apart as digitalization has made it
easier to serve regional markets remotely and Internet companies
have successfully capitalized on the opportunity. A growing
number of countries, from the United Kingdom and France to Chile
and Australia, are now looking to impose “digital services taxes”
(DSTs) on a select few of these Internet companies—mostly
American—on the dubious theory that users are creating a
significant share of their value, so their profits should be
taxed where their users reside. Rob and Jackie discuss the
dangers of this approach—and how policymakers can protect U.S.
firms—with trade expert Clete Willems, partner at Akin Gump
Strauss.


Mentioned:


Clete Willems, “Digital taxes are an even bigger threat to
the US economy during the pandemic,” CNBC, May 27, 2020.

Joe Kennedy, “Digital Services Taxes: A Bad Idea Whose Time
Should Never Come” (ITIF, May 2019).

Robert D. Atkinson, Nigel Cory, and Stephen Ezell, “Stopping
China’s Mercantilism: A Doctrine of Constructive, Alliance-Backed
Confrontation” (ITIF, March 2017).



Related:


Joe Kennedy, “Comments to the U.S. Trade Representative
Regarding Section 301 Investigations of Digital Services Taxes”
(ITIF, June 2020).