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U.S., Turkey agree to end digital services tax, trade retaliation

The United States and Turkey have agreed to terms for withdrawal of Turkey’s digital services tax that largely targeted highly profitable U.S. technology giants and will transition to a new global taxation agreement in 2023, the Treasury said on Monday.

The agreement will allow for the termination of U.S. retaliatory trade measures imposed against Turkey and will take on the same terms agreed by Washington in October with Austria, Britain, France, Germany and Italy, the Treasury said.

A total of 136 countries agreed in principle to withdraw their digital services taxes as part of a sweeping global tax deal agreed on Oct. 8 to adopt a 15% global minimum corporate tax and grant some taxing rights on large profitable companies to market countries.

The United States has not withdrawn its tariff threats against India over its digital services tax, aimed largely at U.S. technology companies such as Google, Facebook and Amazon.com.

Under the agreed withdrawal terms, Turkey and the European countries can continue to collect digital services taxes until the new regime is put in place, but any taxes collected after January 2022 taxes that exceed what companies would have to pay under the new rules would be credited against the firms’ future tax liabilities in those countries. Reuters

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