Canada’s “audience tax” on GAFAM companies stands, for now.

December 1, 2021

There’s a helpful article in the National Post regarding Finance Minister Chrystia Freeland’s stick handling of the yet-to-be implemented Digital Services Tax owed by American tech giants Google, Facebook and Amazon for their monetization of personal data harvested from Canadians online.

The three per cent digital services tax —legislated by the Liberals in 2021 and supported by the Conservatives in their election platform— was scheduled to be implemented January 1, 2022. It was expected to raise $700 million annually in government revenue, rising to $900 million when fully implemented.

Despite the original purpose of the tax being described as an instrument to get American Big Tech to pay its “fair share” for cornering the digital advertising market (thus disrupting the financial viability of media companies around the world), most sovereign governments including Canada signalled very early that a Digital Services Tax was less an “audience tax” than a down payment on a minimum corporate tax for foreign tech companies.

Now that OECD nations including the US and Canada have agreed in principle to a minimum corporate tax beginning in 2024, it’s likely the audience tax will be repealed. Other countries like Turkey have already done so in an effort to resolve trade issues with the US. For now, Freeland is pausing the collection of the Canadian Digital Services tax pending the implementation of the corporate tax in 2024.

The Finance Minister might displease the US administration by not cancelling the 3% tax outright, but likely she is keeping her powder dry until 2024. Also perhaps the latest eye gouging from the Biden administration on Buy America and lumber has something to do with it.

How the Platforms Should Pay for Journalism, September 17 2021