Champagne says Canada won't pause digital services tax

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OTTAWA — Canada won’t put a hold on the digital services tax on big tech companies set to take effect on June 30, the finance minister said Thursday. 

Pressure has mounted on Ottawa to pause the tax ahead of trade discussions with the U.S. 

Finance Minister Francois-Philippe Champagne said Thursday the legislation was passed by Parliament and Canada is “going ahead” with the tax. 

“The (digital services tax) is in force and it’s going to be applied,” he told reporters before a cabinet meeting on Parliament Hill. 

The digital services tax will hit companies like Amazon, Google, Meta, Uber and Airbnb with a three per cent levy on revenue from Canadian users. 

It will apply retroactively, leaving U.S. companies with a $2 billion US bill due at the end of the month. A June 11 letter signed by 21 members of Congress said U.S. companies will pay 90 per cent of the revenue Canada will collect from the tax. 

Canadian and U.S. business groups, organizations representing U.S. tech giants and American members of Congress have all signed letters in recent weeks calling for the tax to be eliminated or paused. 

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It is set to take effect just weeks before a deadline Canada and the U.S. have set for coming up with a new trade deal. 

The Canadian Chamber of Commerce and other organizations have warned retaliatory measures in a U.S. spending and tax bill could hit Canadians’ pension funds and investments. 

Champagne said Canada isn’t the only country that could be affected by those retaliatory measures. 

“These are discussions at the global level,” he said in French. 

Champagne said there’s a wider discussion going on among G7 nations about tax regimes. 

David Pierce, the Canadian Chamber of Commerce’s vice-president of government relations, said in an earlier interview his organization fears Canada could “aggravate an already very tricky trade discussion with the Americans” if it goes ahead with the tax and the retroactive payment requirement. 

The Liberals first promised the tax in the 2019 election, but it was delayed for years due to global efforts to establish a broader, multinational digital taxation plan. 

Following significant delays in that process at the Organization for Economic Co-operation and Development, Canada went ahead with its own tax.