US opposes proposed Canadian tech law that may make Apple, Microsoft, Google, Amazon, Meta and others lose millions – Times of India

The Digital Services Tax (DST) proposed by the Justin Trudeau-led Canada may have major financial implications on US-based tech giants like Apple, Google, Microsoft and others. The US government has objected to the proposed tax and has asked Canada to delay passing the law. The country argued the Canadian DST unfairly targets US-based tech companies as most of the major players in the industry are based in the US.According to a report by AppleInsider, nearly all of the biggest global tech players including Apple, Microsoft, Google, Amazon and Meta among others will be impacted by the proposed Canadian law.

Why Canada is trying to impose these tech rules

In 2021, Canada first proposed its latest tech rules after G20 countries agreed on allowing for international digital service tax (DST) reform. The G20 countries has since been working together to create a multilateral tax on profits made by global tech companies through services.
Canada, along with other countries, has since been planning to implement taxes on profits that tech companies generate from online marketplace services, advertising, social media services, and revenue from selling user data.
Under the proposed Canadian law, tech companies that would qualify for these taxes if they earn $750 million or more in annual qualifying revenue, with at least $20 million coming directly from Canadian users.

What US government said against Canada’s tech law

As per the report, the Biden administration has indicated that the proposed interim tax structure may violate the North American Free Trade Agreement (NAFTA) rules and has requested trade dispute settlement consultations with Canada.
If US Trade Representative Katherine Tai fails to reach an agreement addressing the country’s concerns within 75 days of the consultations, she may request the formation of a settlement panel under the US-Mexico-Canada Agreement (USMCA), the report added. This dispute could potentially result in retaliatory US tariffs on Canadian imports.
Earlier, the US prepared tariffs against seven countries that have implemented digital service tax legislation including Austria, Britain, France, India, Italy, Spain and Turkey. However, these tariffs have been put on hold while global negotiations for a comprehensive digital service tax (DST) agreement continue.
In a statement to AppleInsider, Tai said: “The US opposes unilateral digital service taxes that discriminate against US companies. As we pursue these consultations, we will continue to support the Department of the Treasury in the OECD/G20 global tax negotiations to bring a comprehensive solution to the challenge of DSTs.”
If Canada’s DST passes, this new legislation could take effect later this year, and amounts owed by tech companies would be backdated to January 1, 2022. The Canadian legislation may also be negotiating tactic to nudge the global G20 tax reform proposals concerning digital services, the report notes.