Risk of Ruining Negotiations, Canada Asked to Cancel 3% Digital Tax

OTTAWA, DDTCNews – The Office of the United States (US) Trade Representative asked the Canadian Government not to impose a 3% digital services tax.

The Office of the U.S. Trade Representative said the Canadian Government’s decision to apply a digital services tax was inappropriate. They considered that Canada should focus more on implementing the OECD multilateral plan.

“Instead of pursuing unilateral actions that risk undermining ongoing negotiations. It’s good for Canada to focus on engaging constructively in multilateral OECD negotiations,” the Office of the U.S. Trade Representative said Thursday (24/2/2022).

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As reported diginomica.comCanada plans to levy a 3% tax on certain revenues earned by large digital businesses, particularly those that rely on data engagement and content contributions from Canadian users.

Canada is not the only country implementing such a policy. Other countries such as the UK and Australia have also made similar announcements regarding the taxation of digital services.

However, the UK said it would abolish its digital services tax once the OECD’s multilateral approach is implemented. The US also opposed the policy because it would target the country’s largest technology company.

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The US has approved the international OECD intermediary system which will be implemented in 2023. To that end, the US asked Canada to abandon its plan and double its commitment to implement the OECD agreement.

To note, the OECD agreement in question is a two-pillar proposal that aims to address global tax issues. The hope is that multinational digital companies can pay their fair share of taxation. (vallen/rig)

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