Canada optimistic about digital services tax deal with US – October 31, 2023 at 8:52 pm

Canadian Finance Minister Chrystia Freeland said Tuesday she is cautiously optimistic about resolving a dispute with the United States over Ottawa’s planned digital services tax (DST) for big tech companies.

The Digital Services Initiative aims to tackle the challenge of taxing digital companies such as Alphabet and Amazon.com, which can generate their profits in low-tax countries.

The US government repeatedly protested the Canadian tariff. Washington said it unfairly disadvantaged US companies and urged Ottawa to drop the plan.

“I was in Washington last week and we had some good conversations about DST, including at the official level. I’m cautiously optimistic that we can reach an agreement with our American partners,” Freeland told reporters in Ottawa.

Earlier this year, Canada announced it was moving forward with its tax plan after a two-year delay to allow for a global consensus on taxing multinational corporations.

The negotiation process for a global tax treaty has dragged on and was further postponed in July to allow for further negotiations. Countries other than Canada, which has DST, have agreed to wait at least another year for a global deal rather than raise their tariffs.

Ottawa says waiting another year to implement DST would put Canada at a disadvantage compared to countries that already generate revenue from existing taxes on digital services. (Reporting by Ismail Shakil in Ottawa; Editing by Chris Rees and Jonathan Otis)