Washington — Canada announced this week that it will take steps to implement a digital services tax, as announced by Department of Finance Canada. The Canada tax closely mirrors other unilateral measures pursued by European countries in recent years, which have been subject to trade investigations that found the taxes discriminatory against U.S. tech companies and actionable under U.S. law.
Canada’s pursuit of a unilateral tax is also inconsistent with Canada’s participation in the OECD/G20 Two-Pilar Solution. As part of the agreement announced earlier this year, parties made a commitment not to enact new discriminatory digital services taxes and instead focus on implementation of the global agreement.
Last month, the Computer & Communications Industry Association joined 10 trade associations in a letter to U.S. officials expressing concern with Canada’s planned digital services tax aimed at U.S. companies. In June, CCIA filed comments with Department of Finance Canada detailing concerns with the digital tax proposal.
The following can be attributed to CCIA President Matt Schruers:
“We encourage Canada to reconsider the new digital tax, which targets specific U.S. companies and undermines the immense efforts by international partners to deliver a long-term solution to global tax reform. It is particularly inappropriate that Canada would proceed with its own digital taxes, breaking with the global tax agreement reached just months ago. Imposing discriminatory taxes on each others’ exporters are not how close allies and trading partners act.”
