Canada targets tech giants with digital services tax, aims for $4.3B boost

Canada will press ahead with introduction of a digital services tax on large technology companies, which would raise C$5.9 billion ($4.3 billion) over the five years starting fiscal 2024/25, the federal budget showed on Tuesday.

Canada, seeking to address the challenge of taxing digital giants like Google parent Alphabet and Amazon.com that can book their profits in low-tax countries, had held off for two years to allow for the conclusion of talks on a global treaty on taxing multinationals. Negotiations though are dragging.

Washington opposes the plan on the grounds that it unfairly singles out U.S. firms.

“In view of consecutive delays internationally in implementing the multilateral treaty,Canada cannot afford to wait before taking action,” the finance ministry said in its annual budget.

“The government is moving ahead with its longstanding plan to enact a Digital Services Tax,” The tax would begin to apply for the 2024 calendar year, with the first year covering taxable revenues earned since Jan 1, 2022. Reuters