Canada will maintain a strong stance on technology companies. This was emphasized by government officials in response to Meta, the company that owns Facebook and Instagram, blocking news articles on its platforms in Canada.
[Read our story about Meta’s news ban here.]
Another example of Canada’s firm position on tech was the release of an explanatory note on Friday regarding the Digital Services Tax Act, which will be implemented in January.
This act imposes a 3 percent tax on the revenues of large technology companies, including online marketplaces like Walmart and Amazon, and social media platforms like Meta.
[Read this article from 2020: How Tech Taxes Became the World’s Hottest Economic Debate]
The tax in Canada applies to companies with annual revenue of at least 750 million euros, a threshold set by the Organization for Economic Cooperation and Development (O.E.C.D.).
While the O.E.C.D. is leading negotiations with over 130 countries for a global deal to end tax havens, Canada has taken its own path by implementing its own tax amidst delays.
My colleagues on the Business desk, Alan Rappeport and Liz Alderman, have been covering the O.E.C.D. negotiations and have reported that the deal is expected to generate around $150 billion in global tax revenue annually.
[Read Alan and Liz’s article here: Global Deal to End Tax Havens Moves Ahead as Nations Back 15% Rate]
In 2021, Austria, France, Italy, Spain, and Britain implemented their own digital services taxes and were threatened with tariffs by the United States. However, the European nations agreed to remove their taxes after the implementation of the first part of the global agreement, which grants taxing rights to the jurisdictions where companies make profits. At that time, Canada also agreed to pause its digital services tax and wait for the deal to take effect.
However, several countries, including Canada, decided to delay the implementation of new domestic digital services taxes for one year in July.
Last month, Deputy Prime Minister Chrystia Freeland stated that Canada “cannot support the extended standstill” and plans to proceed with its digital services tax in January.
After the publication of the act’s explanatory note, the National Foreign Trade Council, an American lobby group, expressed disappointment with Canada’s decision and called the act “clearly discriminatory toward U.S. companies.” However, tax law professor Wei Cui from the University of British Columbia, who is writing a book on the digital services tax, argues that Canada’s tax implementation is principled and should not provoke a trade controversy.
2023-08-05 05:00:02
Article from www.nytimes.com
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