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Canada Digital The Almighty Buck

Canada's Digital Services Tax To Stay In Place Despite G7 Deal (financialpost.com) 51

Posted by BeauHD from the get-your-popcorn-ready dept.
An anonymous reader quotes a report from Bloomberg: Canada is proceeding with its digital services tax on technology companies such as Meta despite a Group of Seven agreement that resulted in removing the Section 899 "revenge tax" proposal from U.S. President Donald Trump's tax bill. The first payment for Canada's digital tax is still due Monday, the country's Finance Department confirmed, and covers revenue retroactively to 2022. The tax is three percent of the digital services revenue a firm makes from Canadian users above $20 million in a calendar year.

Keeping the digital tax will not affect the G7 agreement, which focuses on global minimum taxes, the Finance Department said. The Section 899 provision would have targeted companies and investors from countries that the U.S. determines are unfairly taxing American companies. [...] Finance Minister Francois-Philippe Champagne suggested to reporters last week that the digital tax may be negotiated as part of broader, ongoing U.S.-Canada trade discussions. "Obviously all of that is something that we're considering as part of broader discussions that you may have," he said.

Business groups in the country have opposed the tax since it was announced, arguing it would increase the cost of digital services and invite retaliation from the U.S. It also raised the ire of U.S. businesses and lawmakers. A group of 21 members of U.S. Congress wrote to Trump earlier this month asking him to push for the tax's removal, estimating the June 30 payment will cost U.S. companies $2 billion. Before scrapping its digital services tax, Canada wants to see an OECD deal on policies that expand a country's authority to tax profits earned within that country even if a company doesn't have a physical location there -- which is different from a global minimum tax. Earlier today, President Trump said the U.S. is immediately ending trade talks with Canada in response to the tax, calling it a "direct and blatant attack on our country."

"Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately," Trump wrote in a post on Truth Social. "We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period."
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Canada's Digital Services Tax To Stay In Place Despite G7 Deal More

Canada's Digital Services Tax To Stay In Place Despite G7 Deal

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  • TACO (Score:5, Insightful)

    by ArchieBunker ( 132337 ) on Friday June 27, 2025 @04:10PM (#65480874)

    By Monday grandpa will have changed his mind.

    • Re: (Score:3)

      by tlhIngan ( 30335 )

      TACO Tuesday is Canada Day this year, actually.

    • Looks like this time Canada has chickened out. Same sad show as during the NATO conference - nobody has the balls to tell the orange shitgibbon to fuck off and die.

  • It's fascinating to me that country A has deep concerns over what country B levies in taxes on entities within country B.

    If country A feels that country B is getting some advantage by lowering taxes, country A is free to also lower taxes, thus eliminating that advantage.

    Equally fascinating is the concern that somewhere, somehow, some entity has made some money without paying some other entity taxes on it.

    • Re: (Score:2)

      by ceoyoyo ( 59147 )

      The argument is that some companies that are physically located in country A operate in country B but do not pay taxes there. If they were regular goods or services companies they (or their customers) probably would have to pay taxes through various mechanisms. But because they're "digital services" i.e. advertising on web pages, they don't.

      If you want the US to start taxing offshore tax schemes, like Microsoft licensing their logo from an Irish company for 90% of their revenue, it's the same situation.

      Or y

      • The argument is that some companies that are physically located in country A operate in country B but do not pay taxes there.

        So what? If Country B doesn't want to levy a tax on what goes on in Country B, it's none of Country A's business.

        • Re: (Score:2)

          by ceoyoyo ( 59147 )

          Yes, that is Canada's position regarding the US.

          Country A is very large and powerful and likes minding other people's business, in many ways.

      • Re: (Score:1)

        by ScwB ( 1879202 )
        Just an FYI, the US *does* tax companies using offshore tax schemes. See GILTI and BEAT taxes.
    • While we are talking about freedom, what about what state C does in it's own state? Should state N and state O force the federal government to make what they do illegal in their own state because those other states said so? StatEs RigHts11!! [bbc.com]

    • Re: (Score:2)

      by Jeremi ( 14640 )

      It's fascinating to me that country A has deep concerns over what country B levies in taxes on entities within country B.

      I don't think country A really cares one way or the other. It's just that the leader of country A is up well past his nap time, and he needs some plausible rationale for the temper tantrum he is going to throw in order to gather some more attention, so this is what he's chosen this time.

  • Shocking (Score:3)

    by jargonburn ( 1950578 ) on Friday June 27, 2025 @04:14PM (#65480888)
    This is a fair and proportionate response to such a ridiculous policy. The idea of a nation taxing a foreign company not operating within their borders for transactions with (or involving) their citizens is preposterous, and it's curious how they even conceived of such a hare-brained cash-grab!

    That was, naturally, sarcasm. Uncle Sam *always* wants a piece of the pie. For instance, foreign streamers that monetize will (generally?) be taxed on earnings resulting from viewers in the US. I find this specific example interesting, but, more broadly, "foreign corporations" profiting off US citizens/companies will be required by the US to pay taxes on "Effectively Connected Income" (and possibly non-ECI, as well).
    What's good for the goose...
    • Uncle Sam also taxes the earnings of American who not only make that money in foreign country, but live outside of the country as well. At least as far as they are aware of the money even exist.

    • Re: (Score:2)

      by Strider- ( 39683 )

      This is a fair and proportionate response to such a ridiculous policy. The idea of a nation taxing a foreign company not operating within their borders for transactions with (or involving) their citizens is preposterous, and it's curious how they even conceived of such a hare-brained cash-grab!

      By definition, they are operating within the borders of Canada, as they have offices here, operations here, data centers, here, and customers here. Even if they didn't have one square foot of property here, they would still be operating here since they have customers here.

    • The idea of a nation taxing a foreign company not operating within their borders for transactions with (or involving) their citizens is preposterous

      Canada's money belongs to Canada. If a Canadian citizen wants to spend that money, the Canadian government is within its rights to demand that a tax be paid when that money is spent.

      In order to do business in Canada, you have to agree to Canada's legal terms. One of those terms is that if you are collecting Canadian money, a tax needs to be paid on that expenditure. Now, it could be required that each citizen pay that tax for each transaction; which is difficult to enforce, so, the legal agreement is that t

  • *sigh* Very Mature (Score:5, Insightful)

    by Rinnon ( 1474161 ) on Friday June 27, 2025 @04:22PM (#65480904)
    This is a tax that had been approved back in 2024, and scheduled for deployment in June 2025. This isn't new, or news; at least it shouldn't be. So Trump finds out that this tax is coming up and doesn't like it... well okay, fair enough I guess, he's free to not like Canadian tax laws. So why not, I don't know, say: "Hey Canada, WTF is this? Let's discuss you axing this tax, or there will be repercussions" like a normal bully. But no, he comes out with "Fine! I'm not talking to Canada anymore!" like a normal child. JFC

    • Re:*sigh* Very Mature (Score:5, Insightful)

      by DaveyJJ ( 1198633 ) on Friday June 27, 2025 @04:58PM (#65481000) Homepage

      "Hey Canada, WTF is this? Let's discuss you axing this tax, or there will be repercussions" like a normal bully. But no, he comes out with "Fine! I'm not talking to Canada anymore!" like a normal child.

      He's just a typical kid who was bullied who turns into one because that's all he emotionally knows. He behaves like a child because he was stunted as one. I have carrots the same colour as his face in my garden with more emotional stability and empathy than he could possibly ever show. And I'm sure Nixon and Johnson and Ike etc could drop an F bomb as well as anyone could, but in front of TV cameras? Guy has no sense of decorum or common manners (yeah, I'm old, like "mom used to go the bank with gloves on old", manners mattered once, kids). Plus, having been given millions from daddy probably didn't help his emotional growth either. TACO.

    • Re: (Score:2)

      by olddoc ( 152678 )
      The tax was passed in 2024 and Canada wants to collect it retroactive to 2022. If there's one kind of tax I don't like it's a retroactive tax.

    • This is a tax that had been approved back in 2024, and scheduled for deployment in June 2025. This isn't new, or news; at least it shouldn't be. So Trump finds out that this tax is coming up and doesn't like it... well okay, fair enough I guess, he's free to not like Canadian tax laws. So why not, I don't know, say: "Hey Canada, WTF is this? Let's discuss you axing this tax, or there will be repercussions" like a normal bully. But no, he comes out with "Fine! I'm not talking to Canada anymore!" like a normal child. JFC

      There is the argument that this is functionally a tariff, which Canada is just calling a tax. And frankly it is. The thresholds were calibrated to hit foreign (mostly US) companies, and the implementation is designed to make those companies the "bad guy" when they inevitably raise the price of goods in Canada to cover the tax. Other places also have a digital services tax, and it's always designed to target US companies because they dominate the space. I mean, apply the same logic to Canadian aluminum... if

  • Expect to see more of this over the next 4 years, taxes that hit Canadians in ways they don't notice directly.
    • I happen to like a lot of things that the government does for me, like ensure I have access to healthcare or fix roads. Unfortunately these things get more expensive every day. Are we going to keep harping on about wasted money? Musk proved there wasn't all that much to cut in the US, hard to see there would be much more in Canada.

      • I happen to like a lot of things that the government does for me, like ensure I have access to healthcare or fix roads. Unfortunately these things get more expensive every day. Are we going to keep harping on about wasted money?

        Trudeau 2.0 should have our national debt up to 2 trillion in no time at all. Sadly it is not going towards healthcare.

        • Re: (Score:3)

          by caseih ( 160668 )

          Healthcare is a provincial responsibility. The feds kick in tax money in the form of transfer payments, which are maligned and misunderstood by nearly every fellow Canadian I know. Whether some of this money goes to healthcare or not depends on your provincial government. Here in Alberta the premier is dead-set against healthcare (or just about anything that's important), so the money definitely won't go towards it here.

          Also here in Alberta it's common to hear people complain about federal transfer payme

          • Healthcare is a provincial responsibility.

            So Canada Heath Transfer notwithstanding, all that national debt still isn't going towards healthcare. Well there is dental care. Nothing says douchey like putting your dental work on the credit card for your grandchildren to pay.

            So a certain percentage of the money raised through this digital services tax (which honestly won't amount to much in the grand scheme of things) will be sent to provinces.

            It's still another tax. Canadian end users will pay it all in the end.

            • So kids should just live with no teeth? Do you think about the conditions you are subjecting people to? How about you make a sacrifice and identify a service that you use that maybe could end so that the government could save money. That's the thing, fiscal conservatives always talk a big talk about cutting this and that but as Musk found out; things were instituted because America has grown and more people need more things. With every thing he cut, millions of people's lives got worse. In the end he c

              • So kids should just live with no teeth? Do you think about the conditions you are subjecting people to?

                Kids on assistance already get free care. Working parents should not have kids they can't afford. Do you think the government should spend more than it takes in on a permanent basis? What about all the conditions people are subjected to because there is no money? Should we just spend with abandon and completely ignore any capacity to afford it? Structural deficits - borrowing every year forever - are a relatively new thing sought out by low information voters and politicians desperate to buy any and a

                • Re: (Score:2)

                  by caseih ( 160668 )

                  Times are obviously different now, but historically, conservatives have increased the debt more than liberals in Canada. In fact the last time the budge was actually balanced was under Cretien and later Martin, if I'm not mistaken. Harper inherited a brief surplus, but the crash of 2008 erased that pretty quickly and it hasn't been seen since.

                  • No argument here, I'll give Paul Martin (and Bill Clinton in the US) props for being fiscally prudent. I think what is lost however is that increases in debt have historically been relatively small. Trudeau took us from 800 billion to 1.6 trillion. Or to put it another way, more debt in 10 years than every other prime minister, ever.

                    There is no point in even pretending now. The debt is never going to be reduced in any meaningful way. They are maxing the credit card, and we'll be making the minimum
                • Still you have no solutions though. That's the main point. You talked and said stuff but didn't really provide any ways to solve the problem without hurting people. Sure the wealthy get wealthier when we pay interest on loans, but if they start contributing more than it solves that problem too because more of it cycles back into the system.

                  • You talked and said stuff but didn't really provide any ways to solve the problem without hurting people.

                    If you believe every penny the government does not spend hurts someone I doubt any solutions are going to resonate with you.

                    Sure the wealthy get wealthier when we pay interest on loans

                    Not only that they have convinced you it is necessary. Not much else to say really.

                • Working parents should not have kids they can't afford.

                  Just curious, but where do you return them if you have a major cut to your income after they're born? Does the beer store take them back like deposit bottles?

                  • I'm fine with helping such people out temporarily. Best not to encourage dependence on government any more than necessary though. I know couples with subsidized daycare and dental why own two SUVs and take tropical vacations every winter. They think it is all free money. In reality it is all borrowed money, and the kids will still be paying for it long after mom and dad are gone.
                  • Clearly you should give your kids up for adoption no matter how old they are. The 15-16 year olds may be a bit difficult to place but that's life right? Their parents should have been born to a wealthy family but instead they turned out to be bums.
  • If tariffs cause prices to go up, in Canada Trump get the blame, in the US Trump gets the blame. I expect as a result Canadians will will willing to suffer more pain then Americans

    • Re: (Score:2)

      by caseih ( 160668 )

      Well by definition this is a tax on Canadians, not on American companies. It's no different than sales tax, which applies to physical goods bought in Canada. Trump knows this but he is a compulsive liar. As a Canadian I'm okay with this sales tax.

  • This is Canada imposing a tax on services from firms outside the country.

    There is no logical basis for the tax aside from Canada (like most national govt anywhere) trying to take a cut off any money moving anywhere.

    Personally, I'm fine with it, they're a sovereign state. If they agreed to remove it and have reneged, well, they will have to deal with the consequences.

  • If a Canadian engineering firm designs something to be built in America, nothing crosses the border but information. Specifications one way, blueprints flow the other. The work is taxed in the country of sale, where the customers are. It's always been that way, on both sides.

    This is just a computer doing some work in America (and we all know the actual computer may be in Sweden), work that is sold as a service by Americans, to Canadians. It's no different than the specs and blueprints. A query is s

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