Washington – The Computer & Communications Industry Association joined ten other trade associations in sending a letter urging the Biden Administration to address Canada’s imminent digital services tax (DST). The letter calls for the Administration to take action and investigate the discriminatory aspects of the DST under the U.S.-Mexico-Canada Free Trade Agreement (USMCA).
The DST is included in Bill C-59, which passed the House of Commons on May 28 and is expected to pass before Canada’s Parliament leaves for its summer break in the coming weeks. A CCIA Research Center study found that the DST will likely impose direct losses of up to $2.3 billion annually for U.S. companies and could result in thousands of full-time U.S. job losses.
CCIA has previously raised concerns with Canada’s DST, including through comments to Finance Canada and a letter in December 2023.
The following can be attributed to CCIA Vice President of Digital Trade Jonathan McHale:
“Canada’s imminent enactment of a digital services tax threatens thousands of U.S. jobs and the unjustified extraction of billions of dollars from U.S. firms. Coming at a critical juncture in the global effort to finalize the OECD/G20 Inclusive Framework, the adoption of this DST—expected as early as this week—is a particularly unwelcome signal. This action calls for a clear response to dissuade other countries from following suit and irreparably harming U.S. firms and the OECD process.”
“Urgent and decisive U.S. action is needed immediately upon passage of this law to ensure U.S. operations in Canada are protected and the future of global taxation of digital services does not teeter into a frenzy of discriminatory taxes on U.S. digital exports.”
“Further, despite the storied ties between the United States and Canada as diplomatic and trade partners, what we are increasingly experiencing in the Canadian market is a willingness to toss aside the commitments struck through the 2017 USMCA to forcibly transfer revenue from U.S. digital suppliers to the benefit of local entities. It is time for the United States to defend its interests with its neighbor to protect the integrity of the commitments between the two.”