Statement by USTR Spokesperson Adam Hodge on Canada’s Digital Services Tax As Described in Canada’s Notice of Ways and Means Motion to Introduce an Act to Implement a Digital Services Tax

On December 15, 2021, the Office of the U.S. Trade Representative issued the following statement:

“The Office of the United States Trade Representative (USTR) is concerned with Canada’s announcement that it will continue to pursue a unilateral Digital Service Tax (DST). As noted in comments to Canada regarding the DST described in Canada’s 2021 budget document, most DSTs have been designed in ways that discriminate against U.S. companies, as they single out American firms for taxation while effectively excluding national firms engaged in similar lines of business. USTR continues to strongly oppose any new DSTs adopted by our trading partners.

“The standstill on new digital services taxes prior to the implementation of Pillar One of the October 8 OECD/G20 agreement is an important part of the new architecture for international taxation, which Canada joined. That agreement will help end the race to the bottom over multinational corporate taxation by leveling the corporate tax playing field. Canada’s proposed DST would create the possibility of significant retroactive tax liabilities with immediate consequences for U.S. companies.

“If Canada adopts a DST, USTR would examine all options, including under our trade agreements and domestic statutes.”