US opposes Canada’s digital services tax proposal

The United States on Tuesday announced its opposition to a proposed tax on the largest tech firms by Canada, warning it “would examine all options” should Ottawa go ahead with the levy.

The United States Trade Representative (USTR) said Canada should instead work towards implementing a global taxation agreement that Organisation for Economic Co-operation and Development (OECD) countries announced last year to defuse the global tech tax row.

“As Canada is fully aware, the United States has serious concerns about measures that single out American firms for taxation while effectively excluding national firms engaged in similar lines of business,” USTR said.

It called for Ottawa to “focus efforts on engaging constructively” with the OECD negotiations, “instead of pursuing a counterproductive unilateral measure that risks encouraging other countries to follow suit.”

Should Canada go ahead with the tax, “USTR would examine all options, including under our trade agreements and domestic statutes.”

Washington has hit out at digital services tax proposals globally, which it says impose discriminatory fees on American tech giants like Amazon, Apple and Google.

In October, nearly 140 countries reached an agreement on a 15 percent minimum tax under the auspices of the OECD, leading the United States to remove punitive tariffs on a host of countries ahead of the global tax’s imposition, which is expected in 2023.

Those levies were never imposed, but served as threat to those countries, should they go ahead with their digital services tax.

Canada’s proposed three-percent tax “on revenue from certain digital services” would affect companies with at least $850 million in gross revenues and apply retroactively to the start of this year, though it would not come into effect till 2024, USTR said.

© 2022 AFP