Canada's digital services tax could have caused huge losses for tech giants, assessment

 

 

Canada's digital services tax, which has once again caused turmoil in trade talks between the United States and Canada, is estimated to have caused huge losses for tech giants. Donald Trump had stated the other day that there will be no more trade talks with Canada without repealing the digital services tax. Following this, the Canadian government also stated that it was repealing the digital services tax.

With the levy introduced last year coming into effect, it was expected that American tech giants would lose billions of dollars in the coming years. Tech giants like Apple, Google, and Amazon were most affected by this tax. The Canadian government had decided to impose a tax of three percent on the money these companies earn from Canadian customers. The levy has been in place since last year, but the first payments were supposed to start from Monday. It was to take effect retroactively from 2022. Therefore, US companies would have to pay up to two billion US dollars in taxes. Canada brought this in with a revenue target.

The Parliamentary Budget Office estimated last year that the tax would raise more than $7 billion over five years. The United States has opposed the tax from the start because it would disproportionately affect American tech giants. Officials have argued that the tax discriminates against American companies. The Computer & Communications Industry Association estimates that if the measure goes ahead, US companies could pay up to $1 billion a year in taxes.