Washington – Yesterday, Canada’s Parliament passed Bill C-59, a bill that includes a burdensome and discriminatory digital services tax (DST). The bill is expected to receive Royal Assent soon as early as today and become law, though the enactment date of the DST is to be determined by implementing regulations.
The Computer & Communications Industry Association joined 10 other trade associations this month in sending a letter urging the Biden Administration to vigorously respond to Canada’s enactment of a DST. The letter calls for the Administration to investigate and take formal steps under the U.S.-Mexico-Canada Free Trade Agreement (USMCA) to address discriminatory aspects of this law.
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:
“We have consistently raised concerns that Canada’s digital services tax, by design, would disproportionately target U.S. companies, endangering thousands of U.S. jobs and undermining the operations of U.S. firms in a key market. The U.S. Treasury has been steadfast in opposing such measures as bad tax policy; and the Office of the U.S. Trade Representative has been clear that they implicate trade obligations, warranting the use of the tools at its disposal to defend U.S. interests. With Canada’s DST now law, the time has now come to announce action. Absent a swift and robust response, other countries will follow Canada’s lead, and the OECD/G20 Inclusive Framework will be pushed to the precipice.”