Additional U.S. customs duties effective January 6, 2021; response to French digital services tax

Additional U.S. customs duties effective January 6

The United States determined that imports of certain products from France would be subject to additional customs duties in response to the digital services tax imposed by France.

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The additional U.S. customs duties on imports from France, however, were suspended. That suspension of the customs duties is scheduled to expire tomorrow, January 6, 2021.

There are some reports that the United States may further extend the suspension of the additional customs duties, but nothing official has been released.

Background

  • In July 2019, the French digital services tax legislation was enacted. The digital services tax is a 3% tax on annual revenues generated by certain companies that provide the subject digital services to, or aimed at, French users. The tax applies only to companies with annual revenues from the covered services of at least €750 million globally and €25 million in France.
  • In July 2019, the U.S. Trade Representative (USTR) initiated an investigation of France’s digital services tax and then in December 2019 announced findings that France’s digital services tax was “unreasonable or discriminatory and burdens or restricts U.S. commerce.” The USTR proposed action in the form of additional duties of up to 100% on certain products of France. Read TaxNewsFlash
  • In early 2020, French officials announced that the digital services tax is still to be imposed for 2020, but that collection of the tax was being deferred (in particular, both installment payments due in April and October 2020 being suspended). 
  • The USTR in July 2020 issued a notice addressing findings of the Section 301 investigation of France’s digital services tax and announcing the imposition of additional customs duties of 25% on U.S. $1.3 billion of French products imported into the United States.
  • The USTR then suspended application of the additional duties for 180 days, until January 6, 2021. Read the USTR notice [PDF 405 KB] (six pages as published in the Federal Register on July 16, 2020) that lists the additional customs duties, in an annex.


For more information on this topic or to learn more about KPMG’s Trade & Customs Services, contact:

Doug Zuvich
Partner and Global Practice Leader
T: 312-665-1022
E: dzuvich@kpmg.com

John L. McLoughlin
Principal and East Coast Leader
T: 267-256-2614
E: jlmcloughlin@kpmg.com

Andy Siciliano
Partner and National Practice Leader
T: 631-425-6057
E: asiciliano@kpmg.com

Steve Brotherton
Principal and Global Export and Sanctions Leader
T: 415-963-7861
E: sbrotherton@kpmg.com

Luis (Lou) Abad
Principal, Washington National Tax
T: 212-954-3094
E: labad@kpmg.com

Irina Vaysfeld
Principal
T: 212-872-2973
E: ivaysfeld@kpmg.com

Amie Ahanchian
Principal
T: 202-533-3247
E: aahanchian@kpmg.com

Christopher Young
Principal
T: 312-665-3229
E: christopheryoung@kpmg.com

Gisele Belotto
Managing Director
T: 305-913-2779
E: gbelotto@kpmg.com

George Zaharatos
Principal
T: 404-222-3292
E: gzaharatos@kpmg.com

Andy Doornaert
Managing Director
T: 313-230-3080
E: adoornaert@kpmg.com

Jessica Libby
Managing Director
T: 612-305-5533
E: jlibby@kpmg.com

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