The US Chamber of Commerce has urged the Canadian government to refrain from unilaterally imposing a digital services tax pending international agreement.
Watson McLeish, Senior Vice President, Tax Policy at the US Chamber of Commerce, said that the Chamber is disappointed by Canada’s decision to oppose the recent international agreement to extend the moratorium on imposing digital services taxes on any company for another year.
Earlier this week, 138 tax jurisdictions agreed to a further one-year standstill on the imposition of any new domestic digital services tax measures, despite there being no deadline stipulating when Pillar One will come into force.
However, Canada’s government stated that it will go ahead and implement its domestic digital services tax measures from January 2024 in the absence of any multilateral agreement on Pillar One.
“Imposing a DST would not only be discriminatory but also contravene Canada’s obligations under both the Canada-US-Mexico Agreement (CUSMA) and the World Trade Organization (WTO),” McLeish said. “It’s for this reason that the prospect of unilateral Canadian DST action has elicited staunch bipartisan opposition in the US Congress and warnings of retaliatory measures from the Biden administration.”
The Chamber urged Canada to return to the OECD process and support extension of the DST moratorium.
The OECD’s two‐pillar solution is aimed at ensuring a fairer distribution of profits and taxing rights among countries and jurisdictions with respect to the world’s largest multinational enterprises (MNEs).