Illustration: Aïda Amer/Axios
The Senate Finance Committee's portion of the reconciliation package would allow U.S. companies to retaliate against digital services taxes abroad.
Why it matters: U.S. tech giants are facing billions of dollars worth of taxes abroad, and there's growing appetite in Washington for fighting back against what some lawmakers view as discrimination.
What's inside: The Senate text would increase taxes up to 15 percent on countries found to be imposing unfair taxes.
- The provision would be delayed to Dec. 31, 2026.
- Section 899 of the House-passed bill would allow the U.S. to increase tax rates for foreign direct investment on countries it claims has unfair tax policies.
What they're saying: Industry has pushed back against the House language for being too broad to effectively address digital services taxes.
- ITIF's Hilal Aka said their group is proposing "mirror taxes under Section 891 that would tax the global revenues of large firms from DST countries when they sell in the US market."
- "This would create direct pressure on those countries' major companies, for example, France facing mirror taxes on its luxury goods companies or Canada on its major exporters," Aka said.
The big picture: As lawmakers work to codify the tax provisions, the Trump administration is also eager to retaliate against countries perceived to be targeting the tech industry.
- President Trump directed USTR to look into renewing Section 301 investigations into a host of countries and is leveraging trade negotiations to get rid of DTS.
- Lawmakers last week sent a letter to Trump urging him to secure the removal of Canadian digital services taxes before they are set to be collected on June 30 as part of trade talks with Ottawa.
- "Allowing Canada to proceed with this unprecedented, retroactive tax on U.S. firms would send a signal to the rest of the world that they have the green light to proceed with similar discriminatory cash grabs targeting our firms, workers, and tax base," lawmakers wrote.
What's next: Republicans have a self-imposed deadline of July 4 to pass the reconciliation bill.
