Canada Moves Forward With Tax on Big Tech Despite Opposition by U.S.

 Despite objections from the United States, Canada still intends to enact a digital services tax in 2024, according to Finance Minister Chrystia Freeland.

On Monday, May 15, 2023, in Ottawa, Deputy Prime Minister and Minister of Finance Chrystia Freeland makes her way to question time on Parliament Hill. The Canadian Press photo by Sean Kilpatrick

Freeland claimed that by agreeing to put off its plans for the new tax until 2020, Canada had already made a "significant concession" when speaking on the phone from the Group of 20 finance ministers conference in India.

In early 2024, her government has promised to enact a new digital services tax (DST), which would go into effect retrospectively on January 1, 2022, barring the ratification of a worldwide tax accord by the members of the Organisation for Economic Cooperation and Development (OECD). According to the Canadian proposal, significant technology businesses operating in Canada would pay a 3% tax on their revenue.

An decision to postpone new DSTs for at least another year was announced by the OECD last week in response to a crucial demand from U.S. President Joe Biden as his government works to ratify the international tax accord. It's uncertain whether Biden can get the OECD accord through Congress given Republican hostility to it.

Business organisations are worried about possible economic ramifications if Canada disobeys American warnings, and U.S. economic Representative Katherine Tai has encouraged Canada not to implement its own DST.

Canada, according to Freeland, would still prefer that the OECD agreement be ratified, and she added that she has been talking about it with her colleagues from the Group of Seven and other ministers present at the India summit.

A lengthier OECD-wide ceasefire would prevent the resurgence of the trade hostilities that were first started by the Trump administration. At the time, some European nations imposed tariffs on businesses like Alphabet Inc.'s Google and Meta Platforms Inc.'s Facebook, prompting the United States to threaten to retaliate with its own.

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