- Canada plans to impose a 3 percent digital services tax (DST) on Jan. 1, which could strain the relationship between Canada and the US.
- DSTs are levies on revenue-generating activities conducted online and often target large American tech firms.
- A global treaty by the OECD aims to replace DSTs with a more comprehensive set of corporate tax rules by 2025.
- Canada wants to implement its DST immediately, arguing it is in the country’s national interest.
- The cost of the DST is likely to fall on consumers of digital services, potentially leading to higher prices.
- Acting alone, Canada could put the global treaty effort at risk, and the US is still working to join the OECD effort.
- The US accounts for 73 percent of Canada’s exports, and the Canadian government’s decision to implement the DST could jeopardize the trade relationship.
- The US argues that the DST unfairly discriminates against US companies and has threatened retaliatory measures.
- Trade negotiations in the next two months will determine whether tensions over the DST can be eased.
Source: taxpolicycenter.org
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
