U.S. opposes Canada’s digital services tax proposal

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FILE PHOTO: The Canada-United States border crossing in Lansdowne
FILE PHOTO: A U.S. and a Canadian flag flutter at the Canada-United States border crossing at the Thousand Islands Bridge, which remains closed to non-essential traffic to combat the spread of the coronavirus disease (COVID-19) in Lansdowne, Ontario, Canada September 28, 2020. REUTERS/Lars Hagberg/File Photo

February 22, 2022

By Kanishka Singh

(Reuters) -The United States Trade Representative’s (USTR) office said on Tuesday it opposed Canada’s plan to enact a digital services tax (DST) and urged Canada to abandon plans for such a step.

“The United States urges Canada to abandon any plans for a unilateral measure and instead redouble its commitment to the rapid implementation of Pillar One of the October 8 OECD/G20 agreement and the negotiation of a multilateral convention”, the USTR office said in a statement.

The USTR also raised concerns about measures that it said singled out American firms for taxation while excluding national firms engaged in similar lines of business.

“Should Canada adopt a DST, USTR would examine all options, including under our trade agreements and domestic statutes”, the USTR statement added.

The Canadian government did not immediately respond to a request for comment on Tuesday.

The United States in October withdrew its threat of tariffs against five European countries over their digital services taxes as part of a deal to manage the transition to a new global tax regime for large highly profitable corporations such as Alphabet Inc’s Google and Facebook. But it remains at odds with Canada over the issue.

Last month, Deputy U.S. Trade Representative Jayme White expressed Washington’s concern about Canada’s proposed digital services tax in talks with Canada’s deputy trade minister, David Morrison.

Canada unveiled the proposed measure in April, saying it would stay in place until major nations come up with a coordinated approach on taxing the big digital companies.

The Organisation for Economic Cooperation and Development has since agreed on a common approach to ensure such companies pay their share of taxes, but a treaty to enforce this has yet to be implemented.

(Reporting by Kanishka Singh in Bengaluru, Editing by Franklin Paul, Bernard Orr)





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