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Canada Confronts Calls to Pause Digital Services Tax Before $2 Billion Retroactive Charge

U.S. lawmakers warn the retroactive levy could trigger retaliation that jeopardizes Canadian pension funds

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Overview

  • A June 11 letter from 21 U.S. lawmakers estimates the initial retroactive bill will total $2 billion for American tech firms
  • Under the measure, a 3% tax on revenue from Canadian users will apply to tech giants such as Amazon, Google, Meta, Uber and Airbnb and is projected to generate $7.2 billion over five years
  • U.S. industry associations and the U.S. Chamber of Commerce have labeled the retrospective charge an egregious overreach and called for its suspension
  • The Canadian Chamber of Commerce has warned that U.S. countermeasures in a pending spending and tax bill could hit Canadian pension funds and other investments
  • Finance Minister François-Philippe Champagne’s office declined to say whether the government would pause or amend the tax before its scheduled June 30 implementation, weeks ahead of critical trade negotiations with the United States