US Aiming Countries that Enforce Digital Tax, Global is Threatened to Heat up

WASHINGTON. The Indonesian government officially imposed a digital tax in the form of Value Added Tax (VAT) on 1 July. 
Regarding this regulation, the government will immediately collect tax from all Over The Top (OTT) companies in Indonesia, such as Netflix, Zoom to Spotify. Not only Indonesia, other countries have also begun implementing digital tax including India and the European Union.

Related to this, the government of the United States (US) through the U.S. Trade Representative (USTR) conducted an investigation of countries that apply digital taxes, including Indonesia. They are concerned about the application of digital tax targeting US-based OTT companies such as Facebook, Google or Amazon, is unfairly applied. 

"President (Donald) Trump is concerned that many of our trading partners are adopting tax schemes designed to unfairly target our companies. We are prepared to take all appropriate action to defend our businesses and workers against any such discrimination," Robert E. Lighthizer, the trade representative, said in a statement as cited from Reuters.com. 

The USTR said the investigation would include a digital service tax adopted or being considered by 10 jurisdictions. Among others, Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey and the United Kingdom. Quoted from bbc.com, the investigation was conducted after a number of countries began to consider implementing taxes for online services from several U.S.-based companies.These countries agreed that those OTT companies are costing too little to each country in which they operate and are assessed to pay tax according to the rules in each jurisdiction where the company make a profit. 

However, the U.S. government considers that the imposition of digital tax on technology companies must be discussed and agreed upon in a multilateral forum through the Organization for Economic Co-operation and Development (OECD). In fact, discussions related to this matter proceeded slowly. This is what drives many countries to make their own decisions.

Citing from nytimes.com, the investigation was conducted under Section 301 of the 1974 Trade Act, which gives the US government broad authority to respond to unfair practices that have a negatively affect U.S. e-commerce. They have used the same legal provision to initiate a trade war with China. 

Therefore, the investigation has the potential to increase the tension of global trade disputes which could result in retaliatory taxes on U.S. goods. Besides, the U.S. government's move will also complicate global negotiations that have been underway for more than a year and are aimed at reaching a multinational consensus on the procedure for cross-border digital tax collection. (Ken)