The Trudeau Liberals’ Google tax appears doubtful after President Donald Trump on Thursday called it an anti-American trade barrier.
First payments under the multi-billion dollar tax were due this summer, Blacklock’s Reporter.
“Only America should be allowed to tax American firms,” said a White House Fact Sheet issued as Trump announced a 180-day countdown to reciprocal tariffs.
“Trading partners hand American companies a bill for something called a digital services tax. Canada and France use these taxes to collect over $500 million per year from American companies.”
Parliament last June 19 passed the Digital Services Tax Act. Google, Facebook, Amazon and other large multinationals were required to register with the Canada Revenue Agency January 31 with first payments due June 30, 2025.
The federal 3% tax is charged on foreign companies with a minimum $20 million a year in Canadian revenue and more than $1 billion in annual worldwide revenue.
The Budget Office in a 2023 report Digital Services Tax predicted Parliament would collect $3.7 billion in the first two years.
“For many years the United States has been treated unfairly by trading partners, both friend and foe,” Trump wrote in a reciprocal trade And tariffs Executive Order on Thursday.
He served 180-day notice of final recommendations for retaliation “to counter non-reciprocal trading arrangements” like Canada’s digital services tax.
The order cited numerous other examples. “The US tariff on ethanol is a mere 2.5% yet Brazil charges US ethanol exports a tariff of 18 percent,” it said.
“India charges a 100% tariff on US motorcycles while we only charge a 2.4% tariff on Indian motorcycles,” said Trump’s order.
“The European Union imposes a 10% tariff on imported cars yet the US only imposes a 2.5% tariff.”
American critics had warned Canada of consequences. “A tax policy that raises prices for Canadian consumers and imposes costs on US firms may pose a barrier to the export of US digital services to Canada,” said a January 6 report by the Congressional Research Service, Canada’s Digital Services Tax Act.
Canadian critics also opposed the tax as short-sighted. “These cheap political gimmicks have Canadians footing the bill,” Conservative MP Jasraj Singh Hallan told the Commons December 16.
“At the end of the day Canadians are having to suffer for these really incompetent political policies.”
The Library of Parliament in a 2020 report called the tax unworkable. “The Income Tax Act cannot be applied to these companies,” said the report, How Do Digital Multinationals Legally Avoid Tax In Canada?
The report cited the Act sections 250 and 253 that state a foreign corporation is only taxable if it “produces, grows, mines, creates, manufactures, fabricates, improves, packs, preserves or constructs in whole or in part anything in Canada” or “solicits orders or offers anything for sale in Canada through an agent.”
“Foreign companies that use a transactional website to offer their products or services to potential customers in Canada do not need an agent,” wrote researchers.
“Even if the federal government were to amend section 253 of the Income Tax Act to make foreign companies engaging in e-commerce subject to income tax, this amendment would not apply to foreign corporations resident in a country with which Canada has a bilateral tax treaty” such as the United States.”
