Roll Call Quotes Clete Willems on Digital Service Tax Dispute

Akin Gump public law and policy partner Clete Willems has been quoted in the Roll Call story 'U.S. confronts 'digital dagger' from overseas aimed at top tech companies.' The article reports on the Biden-Harris administration's options for responding to the digital service tax imposed by the United Kingdom, France and others on companies that are mostly American.

Roll Call says the Office of the U.S. Trade Representative has found the actions taken by the other countries to be discriminatory, and top U.S. lawmakers have stated that the tax unfairly targets top U.S. tech companies.

According to Willems, who served in the White House as a top trade advisor during the Trump administration, the friction between Washington and the rest of the world stems from how the global economy has shifted toward a model where companies based in one country earn profits from delivering services to citizens of another country without establishing a physical presence.

The Organization for Economic Cooperation and Development (OECD), Willems added, has been discussing how to determine taxing rights when companies have no physical presence in a country and which companies should be considered digital entities. 'It's really just this broad conversation about how to allocate taxing rights, of which digital companies are implicated, but from the perspective of the United States, are not the only companies providing services around the globe,' he said.

Willems pointed out that the tax is designed so that 'it sort of excludes the brick-and-mortar companies with a digital interface while only applying to the digital companies.'

With Treasury Secretary Janet Yellen recently dropping a Trump administration proposal to allow some companies to opt out of whatever agreement the OECD and the G-20 reach, Willems noted that the United States 'really removed what was the Europeans' biggest complaint about our negotiating posture, and that means the ball is now in Europe's court to see if it will show reciprocal flexibility' and modify its position on singling out American companies as well as broadening the definition of digital entities.