Canada’s Digital Services Tax Represents Blow to Global Cooperation
WASHINGTON – Today, global tech trade association ITI warned that Canada’s digital services tax could upend ongoing international tax negotiations in the OECD/G20 Inclusive Framework. The tax, passed today as part of the Fall 2023 Economic Statement Implementation Act (C-59), will further fragment the global tax system and contravene long-standing international tax and trade norms.
“Canada’s passage of a unilateral digital services tax is a troubling development in its approach to multilateral commitments and regional partnership. Specifically, this measure undermines both Canada’s pact under the Canada-United States-Mexico Agreement (CUSMA) and its participation in the OECD/G20 Inclusive Framework’s efforts to address the tax challenges arising from the digitalization of the global economy,” said ITI Senior Director for Tax and Trade Policy Megan Funkhouser. “The action comes as this years-long work at the Inclusive Framework is at a critical point, threatening the group’s ability to reach a multilateral solution and generating further instability in the international tax and trade environment. We’re deeply disappointed that the Canadian government chose to forgo its previous pledge to work with international partners and we urge Canada to swiftly recommit to working within the OECD/G20 Inclusive Framework’s negotiations.”
Earlier this month, ITI joined a letter with almost a dozen other associations calling on the Biden Administration to initiate consultations on the discriminatory aspects of Canada’s digital services tax. ITI’s Megan Funkhouser also wrote a blog on the topic here.
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