Canada Targets Tech Titans with New Digital Tax in 2024

The Canadian government has announced its plan to push ahead with a digital services tax starting in 2024. This tax is specifically designed to target large multinational technology companies operating within the country.

The decision comes as part of Canada’s broader strategy to adapt to the rapidly evolving digital economy and to ensure that these tech behemoths, which include streaming giants, social media platforms, and online marketplaces, are taxed appropriately for the revenue they generate within Canada. The move is expected to level the playing field for domestic companies competing against these tech giants.

The digital services tax, set at a rate of 3%, will be applicable to companies that have a global revenue of more than 750 million euros and generate revenue from digital services provided to Canadian users. This tax is projected to significantly boost Canada’s revenue, with expectations to raise over C$4 billion ($2.97 billion) over the next five years.

This policy aligns with global efforts to address tax challenges arising from the digitalization of the economy. Canada’s decision to implement this tax follows the footsteps of several other countries that have already introduced similar measures. However, it also underscores Canada’s readiness to act independently in the absence of a comprehensive international agreement on the taxation of digital services, per Reuters. 

The Canadian government has expressed its preference for a multilateral approach to taxing digital services and has indicated that it would align its tax with the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, should a global agreement be reached. This approach highlights Canada’s commitment to fair and equitable taxation in the digital age, while also ensuring that it remains an attractive destination for digital innovation and investment.

Source: Reuters