The Canadian Government might have quietly backed down on it plans to implement the much-opposed Digital Services Tax (DST), as observed by Michael Geist, Canada Research Chair in Internet and E-Commerce Law at the University of Ottawa, in an article published on Thursday.
Geist points out language in the fall economic statement that removes mention of the originally planned January 1, 2024 implementation date. The section on DST now leaves some room for the feds to buy more time, saying:
It’s clear in the fall economic statement that the federal government still plans to move ahead with the plans. It’s possible that it now recognizes, albeit quietly, that it needs more time to discuss and negotiate. The tax is part of the government’s moves in attempt to regulate big tech, and as the country has seen with Bill C-18, these plans have not been panning out the way they thought they would.
In response to the fall economic statement, the US Chamber of Commerce Senior Vice President for Tax Policy Watson McLeish on Wednesday released a statement urging government to drop the plans:
“The Chamber is deeply concerned by the government of Canada’s move—in its Fall Economic Statement—toward enacting a unilateral and discriminatory digital services tax. This action follows Canada’s decision in July to oppose 138 of its fellow members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting who voted to refrain from imposing new DSTs or similar measures on any company for another year. We urge the Canadian government to reverse course and make clear that it will not unilaterally impose a DST.
“Canada’s DST would not only target U.S. companies in a discriminatory manner but also contravene Canada’s obligations under both the United States-Mexico-Canada Agreement (USMCA) and the World Trade Organization (WTO). It is for these reasons that the prospect of unilateral Canadian DST action has elicited bipartisan calls for retaliatory measures in both chambers of Congress and similar warnings from the Biden administration.
“The Chamber respectfully renews our call for Canada to abandon its counterproductive go-it-alone approach and rejoin the OECD/G20-led multilateral process—including the extended moratorium on DSTs.”
Via the US Chamber of Commerce
Canadian businesses have previously expressed concerns that the proposed DST would harm them and strain relations with the US. Moreover, it may violate Canada’s obligations under trade agreements like the Canada-US-Mexico Agreement (CUSMA) and the World Trade Organization (WTO).
On November 15, ahead of the fall economic statement, the Canadian Chamber of Commerce, with the US Chamber of Commerce, AmCham Canada, Canada-America Business Council, Information Technology Industry Council, and the National Foreign Trade Council (NFTC) sent a letter to the government to formally express their opposition to the DST proposal.
Information for this story was found via Michael Geist, the US Chamber of Commerce, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
