WASHINGTON – United States Trade Representative Katherine Tai yesterday voiced “concern” to Canadian Trade Minister Mary Ng over the prospect of Ottawa imposing taxes on American tech giants.
In its federal budget presented in mid-April, the Canadian government confirmed its intention to tax, from January next year, internet platforms offering services in Canada in the absence of international regulation.
This 3% digital services tax targets companies with gross revenues exceeding US$900 million (RM3.7 billion) in global business. The measure is expected to bring in C$3.4 billion (RM11.6 billion) over five years, and will apply until an “acceptable” multilateral agreement replaces it, said Ottawa.
Tai “expressed concern about Canada’s recently proposed digital services tax”, according to a statement by her office.
On the international level, the Organisation for Economic Cooperation and Development (OECD) is studying reforms to modulate corporate tax according to the profits made in each country, regardless of their country of origin.
That would target in particular digital giants, which often pay taxes out of proportion to the income and profits they generate locally.
OECD wants to obtain a global agreement in principle at the G20 Finance meeting on July 9 and 10, then at a final meet in October.
The US representative and Canadian minister also discussed the protracted litigation over Canadian lumber. Washington believes this wood is sold below market price to promote exports.
And, Washington has imposed countervailing duties that Ottawa considers “unfair” and “unjustified”. The case was brought before the World Trade Organisation, which ruled in favour of Canada, but the US appealed the decision last September.
Tai and Ng “agreed to continue to collaborate on addressing these and other issues, and to maintain an open line of communication”, said the statement by the former’s office. – AFP, May 18, 2021
