Canada is preparing to levy a 3% tax on large international technology companies (which are essentially neighbors from the United States) based on the income they derive from Canadian users. This tax will only apply to companies with revenues exceeding 1.1 billion Canadian dollars per year.
Canada’s digital service tax legislation is similar to the digital services tax laws in Europe that came into effect in 2020. The Canadian legislation will come into force by 2024 but will retroactively apply to income as far back as 2022.
Canada originally intended to wait for an international tax agreement to be reached through the OECD, but with the United States refusing to sign on, Canada decided not to wait any longer and opted to implement its own tax laws instead.
Source – Bloomberg
Image from the Canadian Parliament
TLDR: Canada is implementing a 3% tax on large international tech companies based on their Canadian user-derived income, in absence of an international tax agreement.
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