Government of Canada Statement on International Tax Reform

The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, and The Honourable Mary Ng, Minister of Export Promotion, International Trade and Economic Development, have issued the following statement regarding the US Trade Representative’s request for consultations on Canada’s digital services tax under the Canada-United States-Mexico Agreement (CUSMA):

“Canada is committed to ending the corporate tax race to the bottom and ensuring that all corporations, including the largest global companies, contribute their fair share of taxes wherever they operate. Our strong social safety net relies on a solid national tax base, which necessitates fair tax contributions from businesses operating in Canada.

“Our primary goal has always been to secure a multilateral agreement. We continue to support the OECD’s two-pillar plan, established in 2021, and have actively collaborated with international partners to implement it.

“Currently, several of our key allies—such as France, the United Kingdom, and Italy—have already implemented digital services taxes. Canada faces a competitive disadvantage compared to these countries, which continue to collect revenue through their existing digital services taxes.

“The Canadian government has been clear for years about our intent to implement a digital services tax if a global agreement on Pillar One is not achieved. Despite repeated attempts and missed deadlines for an international agreement, we remain committed to rescinding our provisional tax once a suitable multilateral measure is in place.

“We have maintained close dialogue with our American counterparts on these taxation matters over recent years, including in recent months. Utilizing the new NAFTA framework for further discussions is appropriate. These consultations reflect the collaborative economic relationship between Canada and the United States. We look forward to demonstrating Canada’s compliance with trade obligations and remain hopeful for a fair international tax solution in the near future.”