Washington – The Computer & Communications Industry Association joined fived other trade associations in sending a letter urging the Biden Administration to counter Canada’s efforts to enact its proposed digital services tax (DST). The letter calls for the Administration to take action and open an investigation pursuant to Section 301 of the Trade Act of 1974, focusing on the discriminatory nature of Canada’s DST, once it is passed into law.
As we approach year’s end, this issue takes on an added urgency: the Canadian government has previously signaled the law would enter into effect on Jan. 1, 2024. Even if not passed before that date, the law as drafted provides for retroactive application to that date. In addition to addressing a bad policy, pushing back against such measures is critical to support progress under the OECD/G20 Inclusive Framework, since unilateral measures will greatly undermine momentum for a fair, multilateral solution. This is precisely why the OECD called for the removal of “all Digital Services Taxes and other relevant similar measures with respect to all companies” and a commitment to not “introduce such measures in the future.” CCIA has previously raised concerns with Canada’s DST, including through comments to Finance Canada.
The following can be attributed to CCIA Vice President of Digital Trade Jonathan McHale:
“Canada’s renewed embrace of a digital services tax caps a year of hostile treatment of U.S. digital service suppliers. In this case, its departure from the international consensus to pursue a discredited tax measure also threatens momentum for a multilateral solution. We encourage close partners of the United States, such as Canada, to instead shift their focus to the OECD and redouble efforts to implement the global agreement to reform international tax rules.
“If Canada continues its trajectory to impose this fundamentally flawed and discriminatory policy, the United States should be prepared to take action to defend U.S. trade interests and its commitment to fair and equitable tax policy. Doing so is not only critical for U.S. digital exports to Canada, but to defend the integrity of U.S. trade flows and commitments globally.”
