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Digital Services Tax on the Rise Globally: The Week Ahead

Not familiar with the phrase digital services tax? Don’t worry–it’ll be the new buzz phrase in 2020, and not in a good way.

More countries are moving away from free cross-border transactions to focus on their local economies. That also means a greater focus on governmental budgets and new ways to raise revenue–enter the digital services tax.

France earlier this year instituted its own tax, and on Tuesday lawmakers in Italy followed suit.

Both place a 3 percent tax on digital revenue for companies–including U.S. technology firms–that meet certain criteria. One is having global revenue of $830.9 million. The second criteria is having at least $27.7 million generated in France for the French tax and at least $6 million generated in Italy for the Italian tax.

Turkey has one that’s upcoming, with an effective date of March 2020. The Czech Republic has a bill on deck proposing its own digital services tax that has been presented to its legislature.

In retaliation, the U.S. is looking at imposing a 100 percent tariff on up to $2.4 billion of popular French goods. The plan is now going through the review process, and could be applied in late January. No word yet on what it plans to do in reaction to Italy’s tax, which goes into effect on Jan. 1, 2020.

The bad news is that if tariffs are placed on foreign imports from countries that are imposing digital services taxes on U.S. technology firms, consumers should expect to see higher prices for those goods in 2020.