Conflict between the US and Canada is deepening over taxation of information and communication (IT) companies operating worldwide, such as Google and Facebook.
From January 1 next year, Canada plans to impose a 3% tax on sales related to internet services to Canadian citizens or various data sources generated in Canada. It is retroactively applied to the sales of Internet companies such as Google and Meta until 2022. However, the problem is that negotiations on a multilateral treaty are currently underway to allow the country where the sales occurred to tax the income of multinational corporations internationally.
Governments around the world have stepped up to solve the problem that global conglomerates, such as Google, are making huge profits overseas but are not paying taxes using various tax avoidance methods. Canada has also pledged to join the multilateral treaty in 2021.
Canada, however, stipulated that it would levy its own digital services tax if the multilateral treaty did not come into effect by 2024. The current multilateral treaty is expected to be delayed by more than one year from 2024, which was the original goal, so the Canadian government’s position is that it will independently tax.
The US government strongly opposes the Canadian government’s move.
US Ambassador to Canada David Cohen recently warned in an interview with local media that “If Canada acts alone, the US government will have no choice but to take corresponding retaliatory measures in trade.”