Canada's Digital Services Tax To Stay In Place Despite G7 Deal (financialpost.com) 31
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."
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."
Re:American Tariffs could STARVE Canada. (Score:4, Informative)
Re:American Tariffs could STARVE Canada. (Score:4, Insightful)
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Re:American Tariffs could STARVE Canada. (Score:5, Insightful)
Why on Earth would a Canadian go to the USA to shop for food, of all things?
With laxer regulations and your FDA being gutted, I consider certain American food like meat or dairy products to be hazardous.
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I have no idea. Ask the Canadian poster above who made the claim.
I can tell you this much. More than once, I have driven from Pittsburgh to Toronto to buy gas cans at Canadian Tire, because they still sell good gas cans. I've also driven from Pittsburgh to Toronto to buy polish sausages from Costco.
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TACO (Score:4, Insightful)
By Monday grandpa will have changed his mind.
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TACO Tuesday is Canada Day this year, actually.
Fascinating (Score:1)
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.
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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
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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.
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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)
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...
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*sigh* Very Mature (Score:4, Insightful)
Re:*sigh* Very Mature (Score:4, Insightful)
"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.
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This is where his supporters on /. tell us that voting for Harris would have been voting for foreign wars...
Liberals being Liberals, new ways to tax Canadians (Score:2)
Re: Liberals being Liberals, new ways to tax Canad (Score:2)
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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.
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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
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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.
Who gets the blame if prices go up (Score:1)
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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.