The Computer & Communications Industry Association (CCIA) has joined ten other trade associations in urging the Biden Administration to address Canada’s imminent digital services tax (DST). The associations have sent a letter calling for an investigation into the discriminatory aspects of the DST under the U.S.-Mexico-Canada Free Trade Agreement (USMCA).
The DST is part of Bill C-59, which passed the House of Commons on May 28 and is expected to pass before Canada’s Parliament adjourns for its summer break. A CCIA Research Center study found that the DST could impose direct losses of up to $2.3 billion annually for U.S. companies and result in thousands of full-time job losses in the United States.
CCIA has previously expressed concerns about Canada’s DST, including through comments to Finance Canada and a letter sent in December 2023.
Jonathan McHale, CCIA Vice President of Digital Trade, stated: “Canada’s imminent enactment of a digital services tax threatens thousands of U.S. jobs and the unjustified extraction of billions of dollars from U.S. firms. Coming at a critical juncture in the global effort to finalize the OECD/G20 Inclusive Framework, the adoption of this DST—expected as early as this week—is a particularly unwelcome signal. This action calls for a clear response to dissuade other countries from following suit and irreparably harming U.S. firms and the OECD process.”
McHale further emphasized: “Urgent and decisive U.S. action is needed immediately upon passage of this law to ensure U.S. operations in Canada are protected and the future of global taxation of digital services does not teeter into a frenzy of discriminatory taxes on U.S. digital exports.”
He added: “Despite the storied ties between the United States and Canada as diplomatic and trade partners, what we are increasingly experiencing in the Canadian market is a willingness to toss aside commitments struck through the 2017 USMCA to forcibly transfer revenue from U.S. digital suppliers to benefit local entities. It is time for the United States to defend its interests with its neighbor to protect the integrity of commitments between the two.”
