Wed, Dec 11, 2019 - Page 10 News List

Canada set to tax digital giants

‘PAY THEIR FAIR SHARE’:Revenue is often reported by technology giants in low-tax jurisdictions such as Luxembourg in a practice that has enraged other governments

AFP, OTTAWA

Canadian Minister of Finance Bill Morneau speaks at the House of Commons on Parliament Hill in Ottawa on Monday.

Photo: Reuters

Canada is to impose a levy on Internet giants such as Amazon.com Inc, Google and Facebook Inc similar to France’s digital services tax that created tensions with Washington, two ministers said on Monday.

“We’ve been very clear that we want to make sure that digital companies pay their fair share of taxes in our country,” Canadian Minister of Finance Bill Morneau told reporters.

“That means we will move forward,” he said.

Canadian Prime Minister Justin Trudeau, during an election campaign that returned his Liberals to power in October, called for a 3 percent tax on digital companies with Canadian revenue of at least C$40 million (US$30 million) and worldwide income topping C$1 billion.

A tax on online advertising and user data starting as early as April 1 next year would put an estimated C$540 million in government coffers in the first year, rising to C$730 million by fiscal year 2023-2024, the party’s election platform said.

Minister of Canadian Heritage Steven Guilbeault said that Ottawa intends to roll out the tax “in the shortest amount of time possible,” without specifying an exact time line.

Both ministers pointed to ongoing Organisation for Economic Co-operation and Development (OECD) negotiations on international taxation, saying they hoped for a multilateral consensus.

Washington has said that the OECD talks are key to resolving the taxation issue and has threatened to impose tariffs on French products over that nation’s digital services tax.

The French tax imposes a 3 percent levy on revenue earned by technology firms in France.

It targets revenue instead of profit, which is often reported by technology giants in low-tax jurisdictions such as Ireland or Luxembourg in a practice that has enraged other governments.

Separately, officials from the US, Canada and Mexico were to meet in Mexico yesterday for talks on a new continent-wide trade deal after US President Donald Trump hinted that efforts to push the pact through the US Congress were close to success.

The talks follow a report that US and Mexican trade negotiators reached an agreement making changes to labor enforcement under the US-Mexico-Canada Agreement signed last year.

That would remove a principal hurdle to ratification of the deal, the fate of which had seemed precarious.

“I am hearing very good things,” Trump said on Monday.

“I am hearing a lot of strides have been made over the last 48 hours,” he said.

US Trade Representative Robert Lighthizer and senior Trump adviser Jared Kushner, the president’s son-in-law, were expected to visit Mexico yesterday, the Washington Post reported.

Canadian Deputy Prime Minister Chrystia Freeland — the nation’s lead negotiator — was also headed to Mexico for meetings on the pact, her office said.

Trudeau earlier on Monday said that the chances of a deal were looking up.

“We’re working hard and hopeful it will get to ratification soon,” Trudeau said.

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