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Federal Register / Vol. 86, No. 107 / Monday, June 7, 2021 / Notices Services and Investment at 202 395
6125; or Michael Rogers, Director for Europe and the Middle East at 202
3952684. For specific questions on customs classification or implementation of additional duties on products, contact traderemedy@cbp.gov.
SUPPLEMENTARY INFORMATION:

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I. Proceedings in the Investigation Spain has adopted a DST that applies a three percent tax on certain digital services revenues related to online advertising services, online intermediary services, and data transmission services. Companies with worldwide revenues of 750 million or more and 3 million in certain digital services revenues are subject to the DST.
On June 2, 2020, the U.S. Trade Representative initiated an investigation of Spains DST pursuant to section 302b1A of the Trade Act of 1974, as amended Trade Act. See 85 FR 34709
June 5, 2020 notice of initiation. The notice of initiation solicited written comments on, inter alia, the following aspects of Spains DST: Discrimination against U.S. companies; retroactivity;
and possibly unreasonable tax policy.
With respect to tax policy, USTR
solicited comments on, inter alia, whether the DST diverged from principles reflected in the U.S. and international tax systems including extraterritoriality; taxing revenue not income; and a purpose of penalizing particular technology companies for their commercial success. Interested persons filed over 380 written submissions in response. The public submissions are available on www.regulations.gov in docket number USTR20200022.
Under section 303 of the Trade Act, the U.S. Trade Representative requested consultations with the government of Spain regarding the issues involved in the investigation. Consultations were held on December 17, 2020. Based on information obtained during the investigation, USTR prepared a comprehensive report on Spains DST, which is posted on the USTR website at https ustr.gov/issue-areas/
enforcement/section-301-investigations/
section-301-digital-services-taxes. The report includes a full description of Spains DST, and supports findings that Spains DST is unreasonable and discriminatory and burdens or restricts U.S commerce. On January 14, 2021, based on the information obtained during the investigation and the advice of the Section 301 Committee, the U.S.
Trade Representative determined that Spains DST is unreasonable or discriminatory and burdens or restricts
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U.S. commerce, and therefore is actionable under sections 301b and 304a of the Trade Act. See 86 FR 6407
January 21, 2021.
On March 31, 2021, USTR issued a notice proposing that appropriate action would include additional ad valorem duties of up to 25 percent on products of Spain to be drawn from a list of 36
tariff subheadings of the Harmonized Tariff Schedule of the United States HTSUS included in the annex to that notice. The March 31, 2021 notice requested comments on the proposed action as well as on other potential actions in the investigation. Witnesses provided testimony at public hearings on May 3 and May 6, 2021, and interested persons filed written comments. Transcripts from the hearings are available on the USTR
website at: https ustr.gov/issue-areas/
enforcement/section-301-investigations/
section-301-digital-services-taxes. The written public submissions are available at: https comments.ustr.gov/s/
docket?docketNumber=USTR-20210005 and https comments.ustr.gov/s/
docket?docketNumber=USTR-20210008.
II. Determination of Action To Be Taken in the Investigation In accordance with section 301b of the Trade Act, the U.S. Trade Representative has determined that action is appropriate in this investigation. Section 301b provides that upon determining that the acts, policies, and practices under investigation are actionable and that action is appropriate, the U.S. Trade Representative shall take all appropriate and feasible action authorized under section 301c of the Trade Act, subject to the specific direction, if any, of the President regarding such action, and all other appropriate and feasible action within the power of the President that the President may direct the U.S. Trade Representative to take under section 301b, to obtain the elimination of that act, policy, or practice. Section 304a2B provides that the U.S. Trade Representative shall make the determination of what action to take on or before the date that is 12 months after the date on which the investigation was initiated, or in this case, by June 2, 2021.
Pursuant to sections 301b and c of the Trade Act, and in accordance with the advice of the Section 301
Committee, the U.S. Trade Representative has determined that appropriate action is the imposition of ad valorem duties of 25 percent on products of Spain specified in Annex A
to this notice. Annex A contains a list
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of 27 tariff subheadings, with an estimated trade value for calendar year 2019 of approximately $324 million. In making this determination, the U.S.
Trade Representative considered the public comments submitted in the investigation, as well as advice of advisory committees. In determining the level of trade covered by the additional duties, the U.S. Trade Representative considered the value of digital transactions covered by Spains DST
and the amount of taxes assessed by Spain on U.S. companies. Estimates indicate that the value of the DST
payable by U.S.-based company groups to Spain will be up to approximately $155 million per year. The level of trade covered by the action takes into account estimates of the amount of tariffs to be collected on goods of Spain and the estimates of the amount of taxes assessed by Spain.
Section 305a of the Trade Act provides, in pertinent part, that the U.S.
Trade Representative may delay implementation of the action to be taken for up to 180 days if the Trade Representative determines . . . that a delay is necessary or desirable . . . to obtain . . . a satisfactory solution with respect to the acts, policies, or practices that are the subject of the action.
Pursuant to section 305a, the U.S.
Trade Representative has determined to suspend the additional duties for up to 180 days that is, up to November 29, 2021 to allow additional time for multilateral and bilateral discussions that could lead to a satisfactory resolution of this matter.
In order to implement this determination, subchapter III of chapter 99 of the HTSUS is modified by Annex A of this notice. Annex A is effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on November 29, 2021, which is 180 days after the determination of action. In the event the U.S. Trade Representative determines that the suspension of the additional duties should be for less than a period of 180 days, USTR will issue a subsequent notice amending the effective date. For informational purposes, Annex B contains a list of the tariff subheadings covered by the tariff action along with short product descriptions. In all cases, the formal language in Annex A governs the tariff treatment of products covered by the action. As specified in Annex A, products provided for in new HTSUS
heading 9903.90.05 will be subject to an additional ad valorem duty of 25
percent. The additional duties provided for in the new HTSUS heading
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