U.S. Warns of Possible Counter-Measures Against Czech Digital Tax

According to Hospodářské noviny, the US has threatened the Czech Republic with tariffs on Czech goods in the event that parliament adopts a 7% digital tax on Google, Facebook, and other giants.

The Czech government’s proposal of a 7% digital tax will be discussed next week in parliament.

Finance Minister Alena Schillerova (ANO, RE) said at yesterday’s ECOFIN meeting that she had no information about US demands related to the Czech tax and that she did not expect such measures from it.

Czech Foreign Minister Tomas Petricek said Thursday that he’s aware of the risks in imposing the 7% levy, which would target local revenue because the majority of profits are booked and taxed in other jurisdictions.

“I understand the United States perceives this negatively,” he said in televised comments. “We’re trying to explain that this step is only temporary until an international solution is found.”

Petricek met U.S. Ambassador Stephen King after the envoy wrote a newspaper opinion piece saying America may respond with proportional countermeasures against the Czech Republic.

The planned Czech tax covers revenue from targeted advertising, digital market places, and user data sales.

It targets companies with annual global revenue over 750 million euros ($832 million), turnover of more than 100 million crowns ($4.3 million) in the Czech market, and more than 200,000 user accounts.

The Czech tax would raise about 2.1 billion crowns this year if it took effect from June, and about 5 billion annually in following years.

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