The US Treasury announced on November 22 that it has reached an agreement with the Turkish government on Turkey’s transition from its digital services tax to the new taxing rules under the OECD-led October 8 international agreement.
The agreement adopts the same terms as those reached by the US last month with Austria, France, Italy, Spain, and the UK.
The terms allow Turkey’s digital taxes to stay in place pending implementation of “Pillar One” of the OECD agreement, which would reallocate a portion of taxing rights to market jurisdictions. In addition, the agreement allows certain excess amounts paid in digital taxes in the interim period by in-scope companies to be creditable against future Pillar One liability.
In return for the coordinated withdrawal of Turkey’s digital tax, the US agrees not to pursue retaliatory trade actions.
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