Canada intends to impose a digital tax on companies providing digital services from 2022 and will remain in effect until major countries come up with a coordinated approach to taxes, Treasury Canada said.
The OECD is working on a common approach to ensuring that digital giants, such as Google and Facebook, pay their share of taxes because of the consequences of the Coronavirus.
Canada said it was concerned about the delay in reaching an agreement, and the threat of taxation of digital services had raised threats of commercial retaliation from the administration of outgoing U.S. President Donald Trump.
The new digital tax comes into force on January 1, 2022 and will remain in force until a common approach is agreed.
The measure increases federal revenue by 3.4 billion Canadian dollars ($2.6 billion) over five years, starting in fiscal year 2021-2022.
"Canadians want a fair tax system, where everyone pays their fair share," Treasury Secretary Chrystia Freeland told lawmakers in the fall.
If necessary, Canada would act unilaterally to impose a digital tax on large multinational digital companies, paying their fair share just like any other company operating in Canada.
Foreign sellers who do not have a physical presence in Canada should also start collecting sales taxes on products, such as mobile applications, online video games and live streaming.
This measure must raise 1.2 billion Canadian dollars over five years.
Ottawa also plans to oblige people renting short-term accommodation to levy sales taxes, saying that popular digital leasing platforms do not currently have to tax, adding that this puts hotels at a disadvantage.
The government is also cracking down on equity options to prevent high-income individuals working in large companies from benefiting unfairly.
From now on, an annual limit of Can$200,000 will apply to the granting of stock options to these people, and Ottawa has not provided a definition for high-income individuals or large companies.
The rules will not apply to startups, which often cannot pay competitive salaries and instead offer stock options.
The treasury said the new rules would generate about 200 million Canadian dollars in federal revenue.
0 Comments