CCIA supports USTR’s challenge to Canada’s Digital Services Tax

Strong support expressed by the Computer & Communications Industry Association (CCIA) for the US Trade Representative’s (USTR) announcement to consult with Canada over its digital services tax (DST), which is seen as discriminatory against US companies.
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The Computer and Communications Industry Association (CCIA) has expressed strong support for the US Trade Representative’s (USTR) recent announcement regarding consultations with Canada over its digital services tax (DST). The action marks the initial step in a formal dispute process under the US-Mexico-Canada Agreement (USMCA). If the issue is not resolved within 75 days, the US may escalate the matter to a dispute settlement panel.

The DST, enacted through Bill C-59, is perceived by the CCIA and other trade associations as discriminatory against US companies, primarily targeting large foreign tech firms based in the US. The DST imposes a 3% tax on revenue generated by foreign companies from Canadian users, affecting firms with global revenues exceeding $1.1 billion, which includes major US companies like Google and Meta. CCIA’s Vice President of Digital Trade, Jonathan McHale, highlighted the negative impact of the DST, estimating potential losses of up to $2.3 billion annually for US companies and significant job losses.

Why does this matter?

The association has long advocated for US action against the DST, emphasising that it undermines the fair market access stipulated in the USMCA and could set a precedent for similar measures by other countries. In response, Canadian officials have stated that the consultations are part of ongoing discussions and reiterated their commitment to international tax agreements. Canadian officials suggested that the DST would be rescinded if a multilateral solution is achieved.