(Washington) Washington on Tuesday urged Canada to abandon its proposed tax on digital giants, citing its “serious concerns”, and on the other hand called on its neighbor to implement the framework agreement as soon as possible. OECD.
Posted at 1:49 p.m.
“The United States urges Canada to abandon any plans for unilateral action,” said the services of the United States Trade Representative (USTR), in a press release.
Washington invites Ottawa to “rather engage more vigorously in the rapid implementation […] of the OECD/G20 agreement of 8 October and the negotiation of a multilateral convention”.
In response, the office of Deputy Prime Minister of Canada and Minister of Finance Chrystia Freeland said that “Canada’s priority and preference has always been a multilateral agreement”.
“Canada has a clear national interest in this multilateral agreement, which protects against the erosion of the tax base and which will generate additional revenues” for the country, he declared, in an emailed response to the AFP.
“We sincerely hope that the timely implementation of the new international system” will render “unnecessary” Ottawa’s proposed tax aimed at “ensuring the protection of the interests of Canadians”, he added.
In early October, 136 countries, including Canada and the United States, had reached agreement on a framework tax agreement, under the aegis of the Organization for Economic Co-operation and Development (OECD).
This agreement provides for the taxation, in each country of practice, of a minimum part of the income generated by the American digital giants, as well as a minimum global tax rate to avoid tax optimization.
It must now be adopted in the legislation of each of the signatory countries.
Washington also reports “serious concerns” for US companies if such a tax were imposed by Canada unilaterally.
In this hypothesis, the USTR specifies that it “would examine all the options”, notably threatening, in written conclusions sent to the Canadian government, to impose new customs taxes, as had been done for other countries.
In this document, the USTR points out that Canada is considering putting a 3% tax on revenues from certain digital services, stating that it “would apply to companies with gross revenues of at least 750 million euros. (850 million dollars) and at least 20 million Canadian dollars (more than 15 million US dollars) of certain income” earned in Canada.
This tax would not be implemented before 2024, but would nevertheless be retroactive to 1er January 2022. “The Canadian government estimates that this unilateral measure would generate $2.7 billion (C$3.4 billion) in revenue over five years,” it says.