Canada should hold off on its unilateral digital serices tax

The OECD has been working for years on a multilateral deal to establish a minimum global corporate tax, and to enable countries to tax large international digital companes (like Amazon, Google, Facebook, Uber and AirBnB) under an equitable agreed formula.

At a recent meeting 138 of 143 countries agreed to sign on to the deal. The dissenting countries were: Russia, Belarus, Pakistan, Sri Lanka and ... Canada. The reason Canada finds itself in such suspect company? It is insisting on going it alone and instituting its own digital services taxation law, currently scheduled for January 2024.

This insistence represents a major stumbling block to the OECD deal, particularly coming as it does from an influential G7 country. If other countries see Canada going its own way, they may follow, jeopardizing the whole multilateral deal. It has put Canada at loggerheads with many of its usual allies, including the USA, which has even threatened sanctions against Canada, arguing that its actions would violate the Canada-US-Mexico Agreement.

138 countries have agreed to hold off for a year on instituting their own unilateral. Canada, along with a small bunch of other ne'er-do-wells and mavericks, has not. It's embarrassing and a major trade irritant. Canada would do better toeing the line and defending its bilateral trade with the USA than forcing through a unilateral digital services tax.