February 18, 2022

WASHINGTON – Today, global tech trade association ITI urged Canada to withdraw its Digital Services Tax (DST), warning its advancement will undermine multilateral commitments to address the tax challenges arising from the digitalization of the global economy. In comments to Finance Canada’s Consultation on a Digital Services Tax, ITI outlined its concerns with the proposed measure, noting Canada’s involvement in the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework’s ongoing efforts and the measure’s inconsistency with the national treatment commitments in the United States-Mexico-Canada Agreement (USMCA). The comments highlighted the tax’s potential to further fragment the global tax system and contravene long-standing international tax and trade norms.

“We strongly encourage Canada to withdraw its proposal for a digital services tax and respect its commitment to realizing a multilateral, consensus-based solution through the OECD/G20 Inclusive Framework,” said Megan Funkhouser, ITI’s Director of Policy. “Canada’s decision to advance development of a digital services tax is fundamentally at odds with its public support for the negotiations, risks undermining the significant progress participating governments have made during the past several years, and could encourage other governments to enact similarly problematic unilateral tax measures. Adoption of the digital services tax would perpetuate the very outcomes that the participants in the ongoing multilateral negotiations have been actively seeking to avoid.”

Read ITI’s full submission to Finance Canada here.

ITI continues to provide technical input to inform further development of the OECD/G20 Inclusive Framework’s Two-Pillar Solution, most recently through a response to the OECD’s public consultation document on Pillar One – Amount A: Draft Model Rules on Nexus and Revenue Sourcing. Read the submission here.

Public Policy Tags: Tax Policy