June 17, 2021

WASHINGTON — Today, global tech trade association ITI urged Canada to withdraw its digital services tax (DST) proposal and focus on its engagement with the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework to reach a solution to address the tax challenges arising from the digitalization of the global economy.

“As recently as June 13, leaders from Canada and other G7 governments reiterated their support for reaching consensus through the IF’s negotiations,” ITI wrote in its comments. “Once an agreement is reached in the Inclusive Framework, it is incumbent on every jurisdiction to adopt and implement the consensus agreement into domestic laws. To introduce a unilateral digital services tax measure sends a signal that Canada is not serious about its commitment to ongoing negotiations leading up to the mid-2021 deadline. It would also make a future implementation process more difficult and could encourage further proliferation of unilateral measures.”

In the comments to the Department of Finance Canada’s public consultation on a proposed DST, ITI also emphasized the important digital trade provisions recently achieved and implemented through the United States-Mexico-Canada Agreement (USMCA), noting that “[w]hereas [USMCA] reduces trade barriers by facilitating cross-border data flows that allow companies of all sizes and in all industries to access digital services at affordable prices, the adoption of a DST would subject many of the companies delivering those essential services to tax treatment that contravenes longstanding international tax and trade norms.”

Public Policy Tags: Tax Policy