US President Donald Trump has signed a memorandum threatening to impose tariffs against countries that implement digital services taxes (DST) on American tech giants, The Register reports .
The memorandum argues that DSTs are unfair taxes that disproportionately hurt U.S. companies like Netflix, Google, and Amazon. The taxes have been imposed by a number of countries to tax the income of technology companies that operate in their markets but shift profits through low-tax jurisdictions. Netflix, for example, is often cited as an example: users around the world pay for their subscriptions through a company in the Netherlands, even though the content is consumed in other countries.
Foreign governments argue that such schemes allow big tech companies to evade local taxes, depriving budgets of much-needed revenue. DSTs were introduced as a temporary measure while the Organization for Economic Co-operation and Development (OECD) develops a global tax system for multinational corporations. Despite progress in negotiations, many loopholes in the law remain.
In his statement, Trump stressed: "My Administration will not allow American companies and workers and American economic and national security interests to be compromised by one-sided, anti-competitive policies and practices of foreign governments. American businesses will no longer prop up failed foreign economies through extortive fines and taxes."
The memorandum also condemns DSTs as an infringement on U.S. sovereignty, noting that they threaten American jobs, reduce competitiveness, and put sensitive information at risk through access by foreign regulators.
This is not the first time Washington has expressed opposition to DST. The Biden administration previously threatened to impose a 25% tariff on countries that implement the tax, which led the UK, several European countries and India to temporarily abandon DST. However, some countries have retained the tax, and now the Trump administration is raising the issue again.
The memorandum also directs the U.S. trade representative to develop mechanisms to implement a permanent moratorium on customs duties on electronic transactions. While no specific timeline is set, the administration’s intent to protect U.S. technology companies from international taxation is clear.