Canada withdraws from digital tax. Trump decided and breaking the negotiations

The Canadian government has suspended the tax on digital services and returns to negotiations with the USA regarding a trade agreement. Last Friday, US President Donald Trump announced that he was breaking commercial negotiations with Canada because of this tax.

“The Canadian government conducts complex negotiations from the USA about the new partnership in economic matters and security (…) As part of support for these negotiations, the finance minister Francois-Philippe Champagne stated that Canada will suspend the tax on digital services (Digital Services Tax, DST-PAP) in anticipation of mutually favorable broad commercial commercial from the USA. As a consequence of the premiere. President Trump agreed that the parties would resume negotiations to end them until July 21, “said the government in a message published on the night of Sunday to Monday.

This means that resulting from those in force since last year The provisions of tax collection on digital platforms, which was to take place on Monday, was suspended. Champagne is to soon present legislation repealing the act on DST.

The tax was announced as early as 2020, due to the fact that many international companies operating on digital platforms do not pay tax on income from the sale of their services to Canadians in Canada. The government in Ottawa wanted such issues to be regulated in an international agreement, and until such an agreement was reached, tax collection was to be provided by the Act on DST.

“In negotiations on new economic relations and security between Canada and the USA, the new Canadian government will always be guided by the benefits (resulting from – PAP) of agreements in the best interest of Canadian employees and companies. Today's statement supports the resumption of negotiations with the term July 21, as it was set at the June summit of the G7 leaders in Kananaskis,” said Carney quoted in the communication.

Last Friday, Foreign Minister Anita Anand in an interview with CTV television emphasized that “negotiations are conducted behind closed doors for a reason (…) and we would be in a worse position if we were sharing our strategy with the media.”

Trump breaks the conversations

Trump's conversations were broken on Friday less than an hour after the Bloomberg agency reported that the Canadian Ministry of Finance would not give up the plans to start tax collection on June 30.

Canadian DSA was to be 3 percent revenues obtained from Canadian users of digital platforms and is similar to the tax used, among others through Great Britain and France. The tax applies to companies that receive revenues of at least $ 20 million in Canadian in Canada. Until Monday, these companies were to complete the tax declaration, and the tax was to be induced back, from 2022, and apply to such companies as Airbnb, Amazon, Google, Meta and Uber. At the end of June, American companies had to pay the equivalent of USD 2 billion – Canadian media reported. According to estimates, the tax was to bring the Canada budget 7.2 billion CAD in five years.

On Friday, Trump also criticized the Canadian system of production management in dairy and poultry (Supply Management), which has been a disputed point in Canada -USA for years. This time Trump accused Canada that he imposed duties of 400 percent. for American agricultural products. In fact, these products are not covered by the duties in Canada as part of Cusma, i.e. free trade agreements between Canada, the USA and Mexico, which Trump signed during his first term. On the other hand, dairy products are subject to a Canadian duty when their imports exceeded the agreed quantities – the Canadian media reminded.

From Toronto Anna Lach (PAP)

Lach/ Akl/