U.S. trade chief Tai tells Turkey countries must remove digital services taxes

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FILE PHOTO: Katherine Tai testifies before Senate Finance Committee in Washington

WASHINGTON/ANKARA (Reuters) -U.S. Trade Representative Katherine Tai told Turkey’s trade minister it was critical that countries remove individual digital services taxes in connection with a broader multilateral agreement reached in talks led by the OECD, her office said.

Tai discussed digital services taxes, improving access for U.S. companies in Turkey and other issues with her Turkish counterpart, Mehmet Mus, during a virtual meeting on Wednesday, her office said in a statement released on Thursday.

“Ambassador Tai stated that the United States views as critical the removal of individual DSTs in connection with the Organization for Economic Co-operation and Development (OECD) and G20 processes” it said.

She expressed her view that negotiations in multilateral forums represent the best opportunity to resolve issues around digital services taxes.

In a statement on Friday, the Turkish trade ministry said that Mus had repeated Ankara’s demand “for the elimination of the additional taxes applied in the steel industry by the U.S.”

It said Turkey had asked the United States not to impose additional tariffs, by pointing out the consultation processes carried out within the OECD in the steel industry.

More than 130 OECD members agreed this summer to work out new rules on where companies are taxed, to adopt a tax rate of at least 15%, and to drop national digital services taxes in favor of the new taxing rights.

G20 leaders are trying to finalize the deal by an Oct. 28-29 summit in Rome.

The U.S. Trade Representative’s office in June announced 25% tariffs on over $2 billion worth of imports from six countries over their digital services taxes – including Turkey – but immediately suspended the duties to allow time for international tax negotiations to continue.

The U.S. government has concluded that such individual taxes would discriminate against U.S. companies.

During their meeting, Tai and Mus also discussed tackling challenges posed by non-market economies, with a particular focus on excess capacity, and efforts to reform the World Trade Organization, USTR said.

(Reporting by Andrea Shalal in Washington and Ece Toksabay in Ankara; Editing by Peter Cooney and Tuvan Gumrukcu)

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