GAFA tax in the news again - USTR initiates investigation on a host of countries

I had blogged earlier about the tax on digital technologies that several countries are imposing and the possible impact it could have on international commitments.

The USTR in a press release today has decided to have a Section 301 investigation on digital taxes by its trading partners including Austria, Brazil, India, Turkey, Indonesia, Italy and Spain. The press release says this:

The United States Trade Representative announced today that his office is beginning investigations into digital services taxes that have been adopted or are being considered by a number of our trading partners. The investigations will be conducted under Section 301 of the 1974 Trade Act. This provision gives the USTR broad authority to investigate and respond to a foreign country's action which may be unfair or discriminatory and negatively affect U.S. Commerce. A Federal Register notice is being issued today providing details of the investigations as well as information on how members of the public can provide their views through written submissions.

The Federal Notice register is out here and a request for public comments has been made.

The main purpose of the investigation on Digital Services Tax (DST):

The investigation initially will focus on the following concerns with DSTs: discrimination against U.S. companies; retroactivity; and possibly unreasonable tax policy. With respect to tax policy, the DSTs may diverge from norms reflected in the U.S. tax system and the international tax system in several respects. These departures may include: extraterritoriality; taxing revenue not income; and a purpose of penalizing particular technology companies for their commercial success.

And the WTO angle for public comments in the Federal notice:

Whether one or more of the covered DSTs is inconsistent with obligations under the WTO Agreement or any other international agreement.

Currency manipulation was a likely cause for friction in the last decade in international economic relations. Are digital taxes the new friction point?