The Office of the United States Trade Representative (USTR) has concluded that the digital taxes introduced by Spain, Austria and the United Kingdom discriminate against US companies and are “inconsistent with existing principles of international taxation” because they burden or restrict US trade. “Taxation of companies engaged in international trade in goods and services is an important issue,” said US Trade Representative Robert E. Lighthizer. “The best outcome would be for countries to come together to find a solution,” he added, according to a statement issued by the US office.

While the US government is not taking any specific action at this time on these findings on the investigation of digital taxes established by several countries, it says it will “continue to evaluate all available options”.

The Google Tax Investigation

The investigation into the Spanish ‘Google tax’ and similar taxes adopted in Austria and the United Kingdom began in June 2020. On the 6th of January, the office also gave its opinion on the digital taxes established in India, Italy, and Turkey, reaching the same conclusion: they are discriminatory against US companies.

Digital taxes are under consideration or on development in four other jurisdictions (Brazil, Czech Republic, the EU as a whole and Indonesia), but are not currently in force.

The Spanish Case

The tax on certain digital services was approved in Spain on the 7th of October 2020. This is a tax that levies 3% on revenue from online advertising, internet intermediation services and data transmission. It affects global companies with a minimum of 750 million in revenue worldwide and more than 3 million in Spain.

According to the detailed report on the Spanish tax prepared by the USTR, this limit of 750 million euros means that sixty companies meet this condition, of which 34, 56.7%, have their parent company in the United States, while only two are Spanish. The USTR also regrets that the type of services taxed are those in which American companies are leaders. “Consequently, Spain’s digital services tax discriminates against US companies,” the report concludes.

If instead of companies with revenues of more than 750 million being taxed, companies with sales of more than 50 million would be taxed, there would be 249 companies subject to the tax. Of these, 80 (32.1%) would be American and 20 (8%) Spanish.

The USTR Document

The document stresses that the tax is levied on income and not on profits and that it is an extra-territorial tax since it states, it applies to income “not connected to a presence in Spain”.

The tax authorities claim that it does not discriminate against or attack any country, but affects large companies, regardless of their origin. They also explain that it is inspired by the proposal made by the European Commission and that other countries such as France also have such a tax. In any case, the government has insisted on its defence of a global agreement on this tax. And the Executive’s commitment is that when such an agreement is reached within the framework of the OECD, the Spanish tax will be brought into line with the agreement.

Google and Tobin Tax

Google was exploiting loopholes to avoid paying taxes; The Google Tax is being imposed in the EU as a response to this, Google saved itself as much as $3.7 billion in 2016 by moving 16 billion euros between Ireland, the Netherlands, and Bermuda.

Both the so-called ‘Google tax’ and the ‘Tobin tax’ (the tax on financial transactions) came into force on the 16th of January. It has become clear that the settlement of the tax on digital services, which is paid quarterly, will be postponed until July when the second quarter settlement will also have to be made. The tax on financial transactions, which has a monthly settlement, will postpone the settlement for the days of January from its entry into force to the month of April, which will also be when the settlements for February and March will have to be made.

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Your commercial awareness dose!

The coronavirus has been taking a toll on the world economy since it started spreading in the early months of 2020. Lately, Pfizer’s COVID-19 vaccine has generated optimism in the economy. It is expected that the economy would rebound in 2021 and the coming years when the whole world is vaccinated against COVID-19. Although the safe administration of the vaccine to billions of people is a huge challenge, there is the hope of the market revival.

The airlines, hotels, restaurants, and retailers have suffered the most but now there is hope for them. The research and testing for the COVID-19 vaccine have been going on all over the world since it became a global problem. WHO has confirmed that a COVID vaccine will be soon in the market and available to masses by late 2020 or early 2021.

When Pfizer’s vaccine became breaking news in the U.S, it was taken as a good omen by investors because the optimism was reflected in the stock market indexes on Monday. The Dow Jones Industrial Average was about 5.4% up, and the S&P 500 Index was up by 3.8% the same day.

Gradually, as the vaccine is dispersed, the situation will get better when the businesses will have freelines, and the investors would feel safer. It could provide the needed boost to the economy as it might translate into new job opportunities for Americans who have lost their job during the COVID pandemic. The strong results in trials of Pfizer COVID-19 vaccine have shown that it can cure and prevent COVID in 90% of the vaccinated individuals. No major health and safety concerns were raised when the vaccine was tested on more than 43,000 people.

In the wake of the second coronavirus wave, the European Union has agreed to purchase 300 million doses of the COVID-19 vaccine from Pfizer. Other vaccine developers are also not far from reaching the journey’s end. The vaccine maker Moderna has reported that the vaccine is going through phase III trials, and it will be sooner available to the public when the remaining concerns of side effects are gauged.

Similarly, Oxford University-AstraZeneca-backed COVID-19 vaccine candidate is also going through phase III trials. The early batches of the vaccines will be administered by Christmas 2020. The COVID vaccine will soon become the sunshine following the COVID hardships. Although the effects of the COVID will be long-lasting, a smooth recovery is expected to start by the end of 2020 or at the beginning of 2021.

Along with the stocks of other companies, the oil prices spiked 16% as compared to their performance on November 1, 2020. The share prices of major tech companies rose on Thursday, with Apple up 3 percent, Microsoft rose 2.6 percent and Amazon was up 3.4 percent. Despite the uncertainties created by the spread of the virus, there are significant chances of improvement. The trading dynamic on Thursday showed that investors will be more inclined towards buying shares of tech companies for now.

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