In a veiled threat, the USTR said it would ‘examine’ all of its trade agreements with Canada if a digital services tax were to be enacted.
The United States Trade Representative’s (USTR) office has publicly opposed Canada’s plan to enact a digital services tax, warning it would “examine all options” if the tax goes ahead.
“The United States urges Canada to abandon any plans for a unilateral measure and instead redouble its commitment to the rapid implementation of pillar one of the October 8 OECD/G20 agreement and the completion of a multilateral convention in 2022,” the USTR said.
“Should Canada adopt a DST, USTR would examine all options, including under our trade agreements and domestic statutes.”
Canada’s proposed digital services tax, if enacted, would see companies that earn over €750 million globally and CA$20 million in Canada per fiscal year be slapped with a 3% tax “on revenue from certain digital services”.
These revenues include those earned from online marketplace services, online advertising services, social media services, and user data.
The levy would apply retroactively from the start of this year, though it would not go into effect until 2024 if it is enacted, the USTR said.
This isn’t the first time the USTR has opposed digital services tax proposals from other countries, with the trade regulator having repeatedly said this type of tax discriminately targets US tech giants such as Amazon, Apple, Google, Meta, and Microsoft.
In June last year, the USTR issued suspended tariffs on countries that charged digital services taxes in a bid to have those taxes scrapped. The tariffs were eventually set aside after 136 countries agreed to a 15% multinational corporate tax rate under the OECD/G20 agreement.