WASHINGTON, D. C. 鈥� The Office of the United States Trade Representative says it will do what鈥檚 necessary to halt sa国际传媒's tax on large foreign digital services companies.
Last month Parliament approved the government's plan to add a three per cent levy on foreign tech giants that generate revenue from Canadian users. It means the companies will have to pay taxes on that revenue in sa国际传媒.
Many of those companies are based in the United States and American industry is demanding action.
The Computer and Communications Industry Association, which represents many big tech companies including Amazon, Apple and Uber, called on President Joe Biden鈥檚 administration to take formal steps under the U.S.-Mexico-sa国际传媒 Free Trade Agreement.
"With sa国际传媒鈥檚 DST now law, the time has now come to announce action," said Jonathan McHale, the association's vice president of digital trade, in a news release.
It joined 10 other trade associations in sending a letter to United States Trade Representative Katherine Tai urging a robust response.
An official in Tai's office said Monday they are open to using all available tools.
The digital tax was part of the Liberal election platform during the 2019 campaign. Both the Conservatives and New Democrats also proposed a similar levy.
The Liberal government, however, delayed its implementation in order to give more time to global efforts to establish a broader, multinational taxation plan.
A spokesperson for Finance Minister Chrystia Freeland said sa国际传媒's priority and preference has always been a multilateral agreement.
"The Canadian government has been clear for several years that it would move forward with its own digital services tax if a global agreement is not reached," Katherine Cuplinskas said in an email.
"And we are committed to protecting sa国际传媒鈥檚 national economic interest.鈥�
Other countries have brought in similar tools to tax the profits of large multinational companies in the digital sector. But critics of the Canadian measure wanted Ottawa to put it on hold to allow the Organization for Economic Co-operation and Development additional time to get the global framework in place.
However, that framework has seen significant delays, particularly from the U.S. where moves to sign on to the agreement could remain stalled by the political realm of a divided Congress.
David Cohen, U.S. ambassador to sa国际传媒, said discussions between the U.S. treasury department, trade representative and the Canadian finance department are ongoing.
"We continue to discuss our concerns with sa国际传媒 and hope they can be resolved to avoid having to speculate about what the U.S. reaction might be," Cohen said in an emailed statement.
The U.S. Chamber of Commerce and American Chamber of Commerce said in a news release last month that the Canadian tax is in contravention of the global framework and international tax principles at "this very sensitive time in the sa国际传媒-U.S. trade relationship."
The timing is problematic with a looming review of the sa国际传媒-United States-Mexico trade pact in 2026, said John Dickerman, who heads the Business Council of sa国际传媒鈥檚 Washington office. It risks disuniting sa国际传媒 from an essential economic partner.
"You are kicking at a hornets' nest," Dickerman said.
If sa国际传媒 puts itself in a position where it is alienating companies and other countries, Dickerman said it becomes a less enticing place to do business.
"It's not a time for us to be working against each other," he said. "It's a time for us to be working together."
This report by The Canadian Press was first published July 2, 2024.
Kelly Geraldine Malone, The Canadian Press
