Canada's Parliament passed Bill C-59 yesterday, introducing a digital services tax (DST) that has been described as burdensome and discriminatory. The bill is expected to receive Royal Assent soon, potentially as early as today, though the exact enactment date of the DST will be determined by implementing regulations.

The Computer & Communications Industry Association (CCIA), along with 10 other trade associations, recently sent a letter urging the Biden Administration to respond vigorously to Canada’s DST. The letter calls for an investigation and formal steps under the U.S.-Mexico-Canada Free Trade Agreement (USMCA) to address discriminatory aspects of this law.

A CCIA Research Center study indicates that the DST could impose direct losses of up to $2.3 billion annually on 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 through comments to Finance Canada and a letter sent in December 2023.

CCIA Vice President of Digital Trade Jonathan McHale stated: “We have consistently raised concerns that Canada’s digital services tax, by design, would disproportionately target U.S. companies, endangering thousands of U.S. jobs and undermining the operations of U.S. firms in a key market. The U.S. Treasury has been steadfast in opposing such measures as bad tax policy; and the Office of the U.S. Trade Representative has been clear that they implicate trade obligations, warranting the use of the tools at its disposal to defend U.S. interests. With Canada’s DST now law, the time has now come to announce action. Absent a swift and robust response, other countries will follow Canada’s lead, and the OECD/G20 Inclusive Framework will be pushed to the precipice.”