Canada still has a digital services tax; Google disappointed

Canada is always ready to impose a tax on companies providing digital services if needed, the finance department said on Tuesday in an announcement intended to anger the United States.

(Sign up for our technology newsletter, Today’s Cache, for information on emerging themes at the intersection of technology, business and politics. Click here to subscribe for free.)

Canada unveiled the measure proposed in the April budget, saying it would stay in place until major countries come up with a coordinated approach to tax digital giants like Google and Alphabet Inc.’s Facebook Inc.

The Organization for Economic Co-operation and Development (OECD) has since agreed on a common approach to ensure these companies pay their share of taxes, but a treaty to enforce it has not yet been implemented. .

In a tax update, the finance ministry said the new tax would be imposed on January 1, 2024 if the international treaty had not entered into force. In this case, the tax would be payable on the income earned on or after January 1, 2022.

Read also | Should governments regulate online platforms?

“The government sincerely hopes that the swift implementation of the new international system will make this unnecessary,” the update said.

Google has expressed its disappointment. A decision by Canada to impose a tax “would undermine the multilateral consensus and raise prices for Canadians.” We hope he will reconsider his decision, ”said spokesman Jose Castaneda.

Washington strongly opposes it. US Trade Representative Katherine Tai urged her Canadian counterpart in July to drop the proposal.

Read also | G20 approves global minimum corporate tax at Rome summit

“In a time of growing trade tensions, this is yet another nudge to the United States,” Mark Agnew of the Canadian Chamber of Commerce said via email.

Last week, Canada threatened to impose tariffs on a range of U.S. products unless U.S. lawmakers reject a plan to offer tax credits on U.S.-made electric vehicles.