Canada implements 3% levy on foreign tech giants generating revenue from Canadian users
The Office of the United States Trade Representative is gearing up to challenge Canada’s recent decision to implement a three per cent levy on foreign tech giants that generate revenue from Canadian users. This move by Canada has sparked outrage among American industry players, as many of the affected companies are based in the United States.
The Computer and Communications Industry Association, which represents major tech companies like Amazon, Apple, and Uber, is calling on President Joe Biden’s administration to take formal action under the U.S.-Mexico-Canada Free Trade Agreement. They are urging a robust response to Canada’s Digital Services Tax (DST), which will require these companies to pay taxes on the revenue they generate in Canada.
While the Liberal government had initially delayed the implementation of the digital tax to allow for global efforts to establish a broader taxation plan, they have now moved forward with the levy. Finance Minister Chrystia Freeland’s spokesperson emphasized that Canada’s priority has always been a multilateral agreement, but they are committed to protecting Canada’s national economic interests.
Critics of the Canadian measure argue that it should have been put on hold to allow the Organization for Economic Co-operation and Development more time to develop a global framework. However, delays in the process, particularly from the U.S., have prompted Canada to proceed with its own tax.
The U.S. Chamber of Commerce and American Chamber of Commerce have expressed concerns that the Canadian tax goes against international tax principles and the global framework. They are urging the Canadian government to reconsider the levy and re-engage in the multilateral process.
As tensions rise between Canada and the United States over this issue, it remains to be seen how the Biden administration will respond to Canada’s DST. Stay tuned for further developments on this front.
