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Washington calls on Ottawa to drop its digital taxes

Washington calls on Ottawa to drop its digital taxes

Washington on Tuesday urged Canada to drop its proposed tax on digital giants, citing its “serious concerns,” while calling on its neighbor to implement the Organization for Economic Cooperation and Development’s framework agreement as soon as possible.

The United States Trade Representative Services (USTR) said in a press release that “the United States urges Canada to abandon any plans for unilateral action.”

Washington calls on Ottawa to “engage more aggressively in the rapid implementation (…) of the October 8 OECD/G20 agreement and negotiations on a multilateral agreement.”

In early October, 136 countries, including Canada and the United States, reached an agreement on a framework tax agreement, under the auspices of the Organization for Economic Co-operation and Development (OECD).

This agreement provides for taxation, in each country of practice, of a minimum income generated by the American digital giants, as well as a minimum global tax rate to avoid tax optimization.

It must now be adopted in the legislation of each of the signatories.

Washington has also reported “serious concerns” for US businesses if Canada imposes such a unilateral tax.

In this case, the USTR office specifies that it will “examine all options” and, in particular, threatens, in written conclusions sent to the Canadian government, to impose new tariffs, as it has with other countries.

In it, the US Trade Representative’s Office (USTR) notes that Canada is considering a 3% tax on revenue from certain digital services, stating that it “applies to businesses with total revenue of at least 750 million euros ($850 million) and At least 20 million Canadian dollars (more than 15 million US dollars) in specified income “earned in Canada.”

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This imposition will not be implemented until 2024, but nonetheless will be retroactive to January 1, 2022. “The Canadian government estimates that this unilateral measure would generate $2.7 billion (Can$3.4 billion) in revenue over five years.” , Has been chosen.