Canada Moving Ahead With Digital Tax Despite U.S. Objections

The federal government is moving forward with its plan to tax large, international digital companies, Finance Minister Bill Morneau has announced.

The determination by Ottawa to levy taxes on digital companies comes as the United States threatens to impose retaliatory tariffs on France because of a similar tax proposal.

Prime Minister Justin Trudeau’s Liberal Government promised during the October election campaign to impose a 3% digital services tax on digital companies with worldwide revenues of at least $1 billion and Canadian revenues of more than $40 million. The new taxes will come into effect on April 1, 2020, said Morneau.

The tax, which is like France’s new digital services tax that has irked the United States, would be applied to revenue generated through the sale of online ads and user data. Last week, France and the European Union said they were ready to retaliate if U.S President Donald Trump imposed duties of up to 100% on imports of champagne, handbags and other French products.

The tariff threat followed a U.S. government investigation that found France’s new digital services tax would harm U.S. technology companies such as Google, Facebook, Apple and Amazon.com.

Morneau said in Parliament that Canada will work with the Organization for Economic Co-operation and Development (OECD) and other countries as it develops its proposed tax to ensure there are no loopholes.