(Washington) The United States on Friday requested the opening of consultations with Canada within the framework of the CUSMA (Canada, United States, Mexico Agreement) free trade agreement, regarding the imposition of a 3% tax on the revenues of digital giants.
The tax implemented by Canada “appears to be incompatible with [ses] commitments” made under the CUSMA “not to treat American companies less favorably than Canadian companies,” the United States Trade Representative (USTR) said in a statement.
The Canadian Digital Services Tax (DST) was enacted by Order in Council on June 28.
It targets international digital companies such as Amazon, Uber, Airbnb or Netflix, which generate annual global revenues of more than 1.1 billion Canadian dollars, and generate annual revenues in Canada of more than 20 million Canadian dollars.
“The United States opposes unilateral taxes on digital services that discriminate against American businesses. USTR is taking action today to address Canada’s discriminatory policies,” by requesting consultations, U.S. Trade Representative Katherine Tai said in the statement.
Washington, however, assures that it supports “the OECD/G20 global tax negotiations in order to provide a global solution” to the taxation of multinationals, almost three years after the signing of an agreement by nearly 140 countries.
Negotiations are stalling over how to tax digital multinationals where they operate.
The USTR clarifies that if the two neighboring countries fail to reach an agreement within 75 days, “the United States may, under CUSMA rules, request the establishment of a CUSMA dispute settlement panel to examine the matter.