U.S. Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) and Chair Ron Wyden (D-Oregon) called on U.S. Trade Representative (USTR) Katherine Tai to make clear the United States will forcefully defend American employers against the discriminatory taxes being proposed by Canada.
Canada is moving forward with a 3 percent tax on large digital services companies, which would be levied almost exclusively on American companies. It goes into effect in 2024, but in an unusually punitive design, is retroactive to 2022.
“We appreciate you previously noting that ‘[i]f Canada adopts a [digital services tax, DST], USTR would examine all options . . . .’ Regrettably, Canada’s political leadership has not been dissuaded. You must now make clear that your office will immediately respond using available trade tools upon Canada’s enactment of any DST. When you take these steps, you will do so with our full support,” said Crapo and Wyden.
Allowing Canada to target American companies with discriminatory taxes that companies from other nations do not have to pay risks putting all American employers at a competitive disadvantage.
“As we noted, we want the strong economic relationship between the United States and Canada to continue growing. That will become immensely challenging, however, if Canada subjects innovative American companies to arbitrary discrimination without facing any consequences,” the senators wrote.
The bipartisan Finance Committee leaders have repeatedly called on the executive branch to fight back against foreign countries that are increasingly targeting American companies with digital service taxes.
Read the full letter to Ambassador Tai here.
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