Canada still has a digital services tax; Bank tax details to come | Technology news

OTTAWA (Reuters) – Canada is still poised to impose a tax on companies providing digital services, the Department of Finance said on Tuesday in an announcement intended to anger the United States.

Canada unveiled the measure proposed in the April budget, saying it would stay in place until major countries come up with a coordinated approach to tax digital giants like Google and Alphabet Inc.’s Facebook Inc.

The Organization for Economic Co-operation and Development (OECD) has since agreed on a common approach to ensure these companies pay their share of taxes, but a treaty to enforce it has not yet been implemented. .

In a tax update, the finance ministry said the new tax would be imposed on January 1, 2024 if the international treaty had not entered into force. In this case, the tax would be payable on the income earned as of January 1, 2022.

“The government sincerely hopes that the swift implementation of the new international system will make this unnecessary,” the update said.

Washington strongly opposes it. US Trade Representative Katherine Tai urged her Canadian counterpart in July to drop the proposal.

“In a time of growing trade tensions, this is yet another nudge to the United States,” Mark Agnew of the Canadian Chamber of Commerce said via email.

Last week, Canada threatened to impose tariffs on a range of U.S. products unless U.S. lawmakers reject a plan to offer tax credits on U.S.-made electric vehicles.

The update did not mention a campaign pledge by the ruling Liberals to increase corporate taxes on the most profitable banks and insurers to help pay the cost of the COVID-19 recovery.

The Liberals have said they will increase the rate from 15% to 18% on all income over C $ 1 billion ($ 793 million). Officials said more details would be available in next year’s budget.

(Reporting by David Ljunggren; Editing by Cynthia Osterman)

Copyright 2021 Thomson Reuters.

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