(Ottawa) The Digital Services Tax that Canada plans to impose on Netflix and other “web giants” from January 2024 may irritate many Americans, but the subject was far from being salient in the discussions between the president of United States, Joe Biden, and Justin Trudeau. Quite the contrary, according to the Prime Minister.
“I think that, in all the conversations we have had with the Americans, not once has President Biden raised this as a priority, a direct concern with me,” Mr. Trudeau said in French, in an end-of-year interview with La Presse Canadienne on Monday.
He assured that he was nevertheless ready to address the issue, seen as a major bone of contention by several American speakers. For example, the ambassador sent by Washington to Canada, David Cohen, predicted “a big battle” this fall.
“I understand that the Americans are perhaps not very happy with the fact that we are going to do it, but we promised to do it,” added the Canadian Prime Minister.
The tenant of the White House will not have gone that far in private with Mr. Trudeau, the latter suggests. “Even if I always had all kinds of answers to give (him) if he raised” this issue, he clarified.
When his Liberal team was re-elected in 2019, obtaining a first minority mandate, the Prime Minister had already promised to ensure “that web giants pay tax on the revenue they generate in Canada”.
The Liberals first expected that a multinational tax framework, at a rate of 3%, would be established following discussions with the Organization for Economic Co-operation and Development (OECD) as well as the G20 countries.
Then, as discussions dragged on, the deadline of January 2024 was set by Ottawa. Justin Trudeau’s government thus signaled that it was its deadline to move forward on its own, in the same way as France and the United Kingdom.
Ambassador Cohen, as well as members of the American Congress, urged Canada to put its plans on hold in order to give the OECD time to implement its road map, known in jargon as the “pillar A “.
“We gave them several years to try to figure out how to work, for them and for everyone. They failed to do so. They tried,” Mr. Trudeau underlined during the interview which took place in a meeting room adjoining one of his offices on Parliament Hill.
A reprieve has already been granted within the OECD on several occasions, as noted last month by liberal MP Sophie Chatel, who has worked within the international organization.
Canada also waited to move forward on its side since “the Americans said ‘no, no, no, we have to do it with the OECD'”, reiterated Mr. Trudeau.
Moreover, the tax withheld must be retroactive based on income from activities on Canadian soil dating back to 1er January 2022 for these companies mainly established in the United States.
Regardless, the Canadian Prime Minister refuses to see stagnation in this entire issue.
“We are not standing still because we are going to bring our tax to digital, as promised,” he concluded.
Even without an international agreement on the multinational framework, Canada must, to implement its January 2024 ultimatum, adopt legislation.
This, called the Digital Services Tax Act, is included in the legislative piece implementing measures announced in the fall economic statement.
This bill is only at the beginning of its study by parliamentarians. This process must be completed in order for the tax to become reality.
Canada sees its possible law as an interim measure, that is to say while waiting for a release at the OECD which would respond to the realities of more than a hundred countries.