Canada announced Today, Tuesday, its plans to impose a tax on corporations providing digital services in 2022 ,according to the Finance Department. The new tax would come into effect on Jan. 1, 2022, and remain in place until a common approach is agreed upon. The measure would raise federal revenues by C$3.4 billion ($2.6 billion) over five years, starting in the 2021-22 fiscal year.
Meanwhile, Finance Minister Chrystia Freeland explained that Canadians want a tax system that is fair, where everyone pays their fair share, as legislators told in the fall economic update. Also, the threat of digital services taxes has prompted threats of trade retaliation from outgoing U.S. President Donald Trump's administration.
On other hand, the foreign-based vendors with no physical presence in Canada will also have to start collecting sales taxes on products such as mobile apps, online video gaming and streaming. The measure should raise C$1.2 billion over five years.
Moreover, the Organisation for Economic Cooperation and Development is working on a common approach to ensure digital behemoths, such as Google and Facebook Inc, pay their fair share of taxes as the coronavirus hammers budgets. Canada reported that it was concerned about a delay in reaching agreement.
Noteworthy, G20 officials said on February 2020, that the world’s leading economies should show unity in dealing with aggressive “tax optimization” by global digital giants such as Google, Amazon and Facebook.
One of the biggest topics discussed by financial leaders of the G20, the 20 largest economies in the world, during their talks in Riyad, is the taxation of digital companies and the impact of the coronavirus outbreak on the global economy.
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