Canada’s digital services tax is here. How could it affect you? – National

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Canada’s digital services tax is here. How could it affect you? – National

The Digital Services Tax is now in effect.

Foreign tech giants must now pay a three per cent levy on revenue from ********* users, retroactive to 2022, after the federal government enacted the measure with an

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on June 28.

Many of those large companies are based in the ******* States and the ********* government and business communities on both sides of the border have called for Ottawa to stop the measure.

“It’s a risky idea,” University of Ottawa professor Michael Geist told Global News.

“If we take a look at how (the ******* States) reacted to similar taxes from other countries in the past,” he continued, “they’ve used tariffs to try to make up for what they perceive to be lost revenue, or to almost punish other countries for moving in that direction.”

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0:28
Biden not concerned about Canada’s 3% tax on web giants, Trudeau says

The Office of the ******* States Trade Representative previously said it will do what’s necessary to halt Canada’s tax on large foreign digital services companies, while a group representing giants like

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, Apple and Uber, called on President Joe Biden to take formal steps under the U.S.-Mexico-Canada Free Trade Agreement.

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“With Canada’s DST now law, the time has now come to announce action,” vice-president of the Computer and Communications Industry Association Jonathan McHale said in a news release.

Ten similar groups also called on the U.S. government to take action.

“It’s quite reasonable to expect that the U.S. will take measures,” Matthew Holmes with the ********* Chamber of Commerce said.

He said it is a “sensitive time” now in the U.S., with presidential and congressional elections later this year.

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“Right now does not seem to be the time where we would be adding more irritants to the trade relationship,” he told Global News — especially because Canada relies on trade with the ******* States more than Washington relies on trade with Ottawa.

“We believe in a win-win situation,” Deputy Prime Minister and Finance Minister Chrystia Freeland said, speaking in Milton, Ont., adding Canada moved ahead after many countries ******* to reach a multilateral agreement about digital service taxes.

“It’s simply not reasonable, not fair for Canada to indefinitely put our own measures on hold,” she said, referring to other G7 countries like the U.K. and France that have digital services taxes.

Geist said the premise behind a digital services tax is that “it’s long been argued that some of the large multinational companies don’t pay their fair share of taxes,” because they can be structed to direct revenue to other jurisdictions.

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The ******** government promised the tax as part of their 2019 election platform. The Conservatives and New Democrats had proposed similar levies.

The Liberals had delayed implementing it amid global efforts to build a broader, international tax plan.

“Canada has been at the table, but now they’ve broken rank,” Holmes said, speaking from Ottawa.

“[The federal government] walked away. They’re moving unilaterally like this. And it’s very concerning to us.

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Freeland said Canada acted collaboratively with the U.S. and continues to engage with the ******* States over the issue.

Geist said the new tax could yield billions of dollars for Canada. But because it’s retroactive to Jan. 1, 2022, that means getting the money is “literally a matter of going through billions or perhaps even trillions of transactions” for every ad that’s appeared on

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in Canada to see if the levy applies.

“This is about levelling the playing field,” Geist suggested, “and more about the government seeing a potential cash grab.”

Holmes said he believes tech companies will pass the tax on to consumers in the form of higher digital subscriptions for streaming services.

— with files from Jillian Piper, The ********* Press’ Kelly Geraldine Malone and Reuters

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Digital services tax, Big Tech, Canada, Consumer, Economy, Politics
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