OTTAWA, Jul 18 (Reuters) – Canada on Tuesday defended its decision to go ahead with introducing digital services taxes from next year, citing national interest, even as Treasury Secretary Chrystia Freeland expressed hope of reaching an international consensus.
More than 140 countries planned to implement a deal in 2021 that would overhaul decades-old rules about how governments tax multinational corporations widely considered obsolete as digital giants like Apple (AAPL.O) or Amazon.com (AMZN. O). can make their profits in low-tax countries.
Last week, however, most countries that planned to apply the first part of the deal in 2024 agreed to wait at least another year to reach a consensus on tax details. Ottawa refused, saying an extension of the freeze would place Canada at a disadvantage against governments that collected revenue under their pre-existing tax regimes.
“At the moment it is really important for us to defend our national interests and what we agreed was a two-year break,” Freeland told reporters in a call from New Delhi after attending G7 and G20 meetings in India.
Ottawa’s new levy would mean a 3% tax on the revenues of major tech companies in Canada.
“We support reaching an international consensus and we’ve had some good conversations within the G7 and bilaterally about finding a way forward where an international agreement can be reached and Canadian interests can be protected,” Freeland said.
The process of introducing such taxes is dragging on and governments planning national digital services taxes agreed to either put them on hold until the end of this year or scrap them altogether once the first pillar of the deal comes into effect in 2025 or later. becomes force.
The first part of the two-pillar deal would redistribute tax rights on approximately $200 billion in profits from the largest and most profitable multinationals to the countries where their sales take place.
Freeland said Canada was already implementing the second pillar, which calls on governments to set a global minimum corporate tax rate of 15% by 2024.
Reporting by Ismail Shakil and Steve Scherer in Ottawa Additional reporting by David Ljunggren in Ottawa Edited by Matthew Lewis and Susan Heavey
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