Senators Call for Action on Canada Digital Tax

Senate Finance Committee Chair Ron Wyden, (D-Ore.), and Ranking Member Sen. Mike Crapo, (R-Idaho), called on U.S. Trade Representative Katherine Tai to make clear the United States will forcefully defend American employers against discriminatory taxes being proposed by Canada. 

Canada is moving forward with a 3 percent tax on large digital services companies, which the senators assert would be levied almost exclusively on American companies. It goes into effect in 2024, but is retroactive to 2022. 

"We appreciate you previously noting that ‘[i]f Canada adopts a DST, USTR would examine all options . . . .’ Regrettably, Canada’s political leadership has not been dissuaded. You must now make clear that your office will immediately respond using available trade tools upon Canada’s enactment of any DST. When you take these steps, you will do so with our full support,” Wyden and Crapo wrote.     

“As we noted, we want the strong economic relationship between the United States and Canada to continue growing. That will become immensely challenging, however, if Canada subjects innovative American companies to arbitrary discrimination without facing any consequences,” the senators wrote. 

The DST is unrelated to Canada's Bill C-18, a formula that would see Meta and Google pay up to four per cent of their annual Canadian search revenue to Canadian news media for rebroadcasting their content.

The bipartisan Finance Committee leaders have repeatedly called on the executive branch to fight back against foreign countries that are increasingly targeting American companies with digital service taxes. 

Read the full letter to Ambassador Tai here.