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World Economic Forum spotlights how digital border taxes could impact AM

The NGO has published a white paper on the subject

The World Economic Forum has published a white paper, “3D Printing: A Guide for Decision-Makers,” which addresses possible business and policy changes associated with 3D printing and offers guidance to governments, businesses and other industry stakeholders to help them prepare for potential changes to trade agreements.

The crux of the white paper issued by the World Economic Forum is centered on the question of how the adoption of a digital border tax would affect the dissemination of 3D printing files across borders. Today, 3D printing files are not subject to any customs duties, meaning that businesses have been able to easily sell, share and send 3D printing files to customers or partners across the globe.

This duty-free scenario is the result of a moratorium on duties for electronic transmissions which was put in place by the World Trade Organization (WTO) in 1998. The moratorium, originally imposed for two years, has been extended year after year. Last month, however, WTO members voted to extend the moratorium until June 2020, where the topic will be taken up at the next senior trade meeting in Kazakhstan.

World Economic Forum digital tax

The question of digital border taxes is not solely based on the growth of additive manufacturing in recent years. It also addresses many other digital goods and services, like streaming content, online education, e-books and more.

Promoting AM adoption

According to the World Economic Forum, two key arguments have emerged, for and against the implementation of electronic duties. On the one hand, adding duties to electronic services and goods could hinder digital and offline trade. On the other hand, others recognize that adding the taxes could increase customs revenues significantly.

Looking at 3D printing specifically— a technology that is still very much in the process of becoming industrialized—lifting the moratorium could slow down the adoption of 3D printing. Moreover, adding duties could influence how businesses choose who to work with based on digital tax rates, which could impact the industry (and adopter industries) on a broader scale.

“Holding off on digital duties would most likely promote 3DP adoption due to lower trade friction costs,” states the World Economic Forum. “This might even encourage innovation, as CAD files could be created collaboratively across borders, for instance using a cloud-based solution. It could also contribute to levelling the playing field among countries for 3DP adoption. There will be no customs duties that might influence firms on how to distribute their value chains around the globe.”

The question of “how?”

Another important aspect of considering digital border duties is how they would be implemented. A technological framework with the capability to control and track digital trade would need to be established—something which could be very costly to implement and enforce.

The World Economic Forum also raises the question of how the digital border tax would be calculated for 3D printing files. If they are considered services, they would likely not be taxed at the border. If they are considered goods, however, more questions would arise—including how to calculate the transaction value of certain digital products that rely on licensing or subscriptions.

The question of how many parts would be produced based on a single 3D printing model would also need to be addressed. As the WE Forum notes: “Unlimited number of prints could be made from a single 3DP digital file. Thus, consideration should be given to alternative approaches to track the future use of 3DP files – through blockchain technology, for instance – with deferred customs duty payment.”

Another option for implementing a border tax would be through a VAT or sales tax, an approach that the WE Forum believes could be more practical.

The white paper published by the WE Forum looks at how 3D printing and its adoption could be impacted by various trade decisions and how businesses and other industry stakeholders can not only monitor and predict AM adoption but also better understand policy changes that could influence how the technology grows.

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Tess Boissonneault

Tess Boissonneault is a Montreal-based content writer and editor with five years of experience covering the additive manufacturing world. She has a particular interest in amplifying the voices of women working within the industry and is an avid follower of the ever-evolving AM sector. Tess holds a master's degree in Media Studies from the University of Amsterdam.

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