Canada's Digital Services Tax To Stay In Place Despite G7 Deal

An anonymous reader quotes a report from Bloomberg: Canada is proceeding with its digital services tax on technology companies such as Meta despite a Group of Seven agreement that resulted in removing the Section 899 'revenge tax' proposal from U.S. President Donald Trump's tax bill. The first payment for Canada's digital tax is still due Monday, the country's Finance Department confirmed, and covers revenue retroactively to 2022. The tax is three percent of the digital services revenue a firm makes from Canadian users above $20 million in a calendar year.

Keeping the digital tax will not affect the G7 agreement, which focuses on global minimum taxes, the Finance Department said. The Section 899 provision would have targeted companies and investors from countries that the U.S. determines are unfairly taxing American companies. Finance Minister Francois-Philippe Champagne suggested to reporters last week that the digital tax may be negotiated as part of broader, ongoing U.S.-Canada trade discussions. 'Obviously all of that is something that we're considering as part of broader discussions that you may have,' he said.

Business groups in the country have opposed the tax since it was announced, arguing it would increase the cost of digital services and invite retaliation from the U.S. It also raised the ire of U.S. businesses and lawmakers. A group of 21 members of U.S. Congress wrote to Trump earlier this month asking him to push for the tax's removal, estimating the June 30 payment will cost U.S. companies $2 billion. Before scrapping its digital services tax, Canada wants to see an OECD deal on policies that expand a country's authority to tax profits earned within that country even if a company doesn't have a physical location there -- which is different from a global minimum tax. Earlier today, President Trump said the U.S. is immediately ending trade talks with Canada in response to the tax, calling it a 'direct and blatant attack on our country.'

'Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,' Trump wrote in a post on Truth Social. 'We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period.'

Read more of this story at Slashdot.