United States and Turkey (Türkiye) announce digital services tax agreement
Transition from the existing Turkish digital services tax to a new international tax framework
Transition from existing Turkish digital services tax to a new international tax framework
The U.S. Treasury Department today announced that the United States and Turkey have reached an agreement on a transition from the existing Turkish digital services tax to a new international tax framework (under the Two-Pillar solution of the OECD/G20 Inclusive Framework) to be implemented in 2023.
According to today’s Treasury release, the agreement represents “a pragmatic solution” and allows for the termination of U.S. trade measures adopted in response to the Turkish digital services tax. According to a USTR notice [PDF 228 KB], the additional duties on products of Turkey are terminated as of November 28, 2021.
Read the agreement between the United States and Turkey.
Background
A digital services tax was enacted in Turkey in 2019 and was effective in March 2020. Read TaxNewsFlash
The United States took steps in reaction to the digital services tax in Turkey. For instance, the Office of the U.S. Trade Representative (USTR) in January 2021 issued reports and findings from the Section 301 investigations of digital services taxes adopted by Turkey and other countries. Read TradeNewsFlash
The Organisation for Economic Cooperation and Development (OECD) in October 2021 provided a tax report to the G20 finance ministers and central bank governors regarding the Two-Pillar solution to address the tax challenges arising from the digitalisation of the economy. Specifically, 136 of the 140 members of the OECD/G20 Inclusive Framework on BEPS reached a political agreement on the Two-Pillar solution as well as a detailed implementation plan.
The U.S. Treasury Department in October 2021 announced that Austria, France, Italy, Spain, and the United Kingdom agreed that (as part of Pillar One) they will withdraw all unilateral measures regarding the imposition of digital services taxes. Read TaxNewsFlash
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.