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Canada’s Proposed DST unfairly targets American companies and threatens U.S. retaliation

Aug 8, 2023

In the wake of draft regulations regarding the implementation of a DST released by the government of Canada on August 4th AmCham Canada has made clear to Deputy Prime Minister Freeland that the DST as proposed not only unfairly targets American companies but also threatens retaliatory action by the United States. In fact, United States Trade Representative (USTR)’s Katherine Tai has already warned Canada that the U.S. Government would have no choice but to implement countermeasures on Canadian businesses should the DST be implemented.

According to AmCham President Rick Tachuk “AmCham Canada and its members recognize the importance of international tax reform, modernization and removing a “race to the bottom” on broader corporate taxation, and believe the OECD process is the best solution to this issue. However, we are concerned with Canada’s decision to pursue its own DST, standing out while 138 OECD countries have agreed on a one-year extension to the current moratorium on DST enactment. This is a troubling move for a country that has long championed the importance of multilateralism.”

Implementing a DST by the Government of Canada would not only result in discrimination against U.S. companies, it would also contravene Canada’s obligations under both the Canada-U.S.-Mexico Agreement (CUSMA) and the World Trade Organization (WTO). The scope of this tax and its application are broad and will have extensive negative economic impacts on our members, including the potential for double taxation. The DST unfairly targets American companies that have long invested and served the needs of Canadian consumers. This tax unfairly focuses on the use of digital means to connect with consumers, a critical element of our modern economic context.

View AmCham Canada’s Letter to Deputy Minister Freeland here.