OTTAWA: Canada is still set to tax corporations providing digital services if needed, the finance ministry said in an announcement set to upset the United States on Tuesday.
Canada unveiled the measure proposed in April’s budget, saying it would remain in place until major nations come up with a coordinated approach on Alphabet Inc’s taxing of digital giants such as Google and Facebook Inc.
The Organization for Economic Co-operation and Development (OECD) has since agreed a common approach to ensure such firms pay their share of taxes, but a treaty to enforce this has not yet come into force.
In a financial update, the finance ministry said the new tax would be levied on January 1, 2024 if the international treaty had not come into force. In that event, tax will be payable on the revenue earned till January 1, 2022.
“It is the sincere expectation of the government that the timely implementation of the new international system will make it unnecessary,” the update said.
Google expressed disappointment. A move by Canada to impose taxes would “undermine the multilateral consensus and raise prices for Canadians. We hope it will reconsider,” said spokesman Jose Castaneda.
Washington strongly opposes this idea. US Trade Representative Catherine Tai urged her Canadian counterpart to drop the proposal in July.
“In a period of escalating trade tensions, this is another blow to the United States,” Mark Agnew of the Canadian Chamber of Commerce said by email.
Canada last week threatened to impose tariffs on a range of American goods unless US legislators vote on a plan to offer tax credits on American-made electric vehicles.
(Additional reporting by Dave Paresh in San Francisco; Editing by Cynthia Osterman)
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