Canada is moving ahead with plans to implement a digital services tax. While the Department of Finance said it favours the OECD-led multilateral approach to taxing internet companies, it's preparing legislation for a domestic levy to serve in the interim period. The new tax will take effect at the earliest at the start of 2024, if the treaty on the initial international reform has not yet come into effect.
Under the draft legislation put out for comment, the tax rate would be 3 percent on revenue from online marketplace, online advertising, social media and user data revenues. Companies must have a global turnover of at least EUR 750 million and a minimum CAD 20 million in revenues in Canada to be subject to the tax. Assuming it takes effect in 2024, the first collection would apply to revenues from 2022.
Comments on the proposal can be submitted until 22 February 2022.
