Ways-Means Blasts Canada Digital Tax

House Ways and Means Committee members are calling on the Administration and the Organization for Economic Cooperation and Development to fight Canada’s unilateral imposition of a digital service tax.

House Ways and Means Committee members are calling on the Administration and the Organization for Economic Cooperation and Development to fight Canada’s unilateral imposition of a digital service tax.

“We write as Members of the Ways and Means Committee to express our disapproval of Canada’s decision to move forward with a digital services tax that, if imposed, would seriously harm American companies and workers,” the lawmakers wrote. “We urge you to impress upon your counterparts in Canada that its unilateral approach is discriminatory and, if enacted, could face significant consequences.”

The members noted that almost all 140 economies participating in the OECD work to reach agreement on updated international tax rules approved a one-year extension of the moratorium on DSTs through December 31, 2024. “We are disappointed that Canada is unfortunately moving against this global consensus with a punitive DST scheduled to take effect next year.”

Aggressive Approach
The proposed three percent DST included in Canada’s budget would apply retroactively to January 1, 2022. “Canada’s unusually aggressive and discriminatory approach would target
US companies and workers who would disproportionally bear the burden of this new tax,” the lawmakers wrote. “Further, Canada’s approach raises serious questions about its obligations under the US-Mexico-Canada Agreement and the World Trade Organization Agreement.”

Given the size of the bilateral trade relationship, “its retroactive DST proposal would be especially damaging to U.S. industry and workers. Therefore, we strongly encourage the Biden administration to work with Congress on action to safeguard our economy and challenge these unfair practices, including through our trade agreements and domestic trade statutes.”

The members requested that Ways and Means be provided an update by October 3 on the Administration’s efforts to ensure Canada does not enact a DST or any other discriminatory unilateral measure.