Treasury Secretary Scott Bessent Explains Severity of Response to Canada’s Digital Services Tax

Treasury Secretary Scott Bessent Explains Severity of Response to Canada’s Digital Services Tax​

I was unaware until this interview the July 1st digital services tax that Canada is going to apply to U.S. tech companies is retroactive in application. Over a billion dollars will be due on Monday as a result of Canada’s targeting. Duplicitous Snow Mexicans.
Treasury Secretary Scott Bessent outlines the details of what Canada did and why President Trump is responding so forcefully. Bessent also explains that the EU doesn’t have a digital services tax, but some European countries do. President Trump is factoring in those targeted tariffs against our tech industry as he seeks to execute new trade agreements with the EU. WATCH:

LILLEY: Carney puts Canadian jobs at risk over foolish tax idea​

Canadian jobs are now on the line over a foolish move to bring in a Digital Services Tax that is angering all sides in the United States.


Mark Carney has decided to put Canadian auto jobs, manufacturing jobs, and the whole steel and aluminum industry at risk over a yet-to-be implement tax. It’s a foolish move for the Liberals from both an economic point of view and from a negotiation standpoint.


On Friday, Donald Trump announced that trade talks with Canada, the ones to try and ease the tariffs, were off. The reason, Carney’s insistence on pushing ahead with a Digital Services Tax that comes into effect next week.

It will require big tech companies like Apple, Uber, Amazon and others to pay 3% of their revenue from Canada — that’s revenue, not profit — to the Canadian government. It also comes with a retroactive payment of roughly $3 billion for the American tech companies to cover the period going back to 2022.
No wonder President Trump calls this legislation unfair. Trump, like Biden before him, has been asking us to drop this tax, which both sides in America believe violates CUSMA, and we have refused to budge so now, he’s walking away from talks.
Last October, when it still looked like Kamala Harris and the Democrats would be the likely winner of America’s November election, Ontario Premier Doug Ford was calling for the DST to be scrapped. Speaking to the Empire Club in Toronto, Ford said the tax threatened Canadian jobs.

Understanding Digital Services Taxes​

• Many countries are unable to appropriately levy income tax on Big Tech companies as these companies do not have a physical presence within their borders. Instead, they use Digital Services Taxes (DSTs) to ensure that these companies pay some tax within their jurisdictions.
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  • While there are attempts at forging multilateral consensus on how to tax large multinational corporations, there is no global consensus on this issue, largely due to U.S. opposition.
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• e U.S. has consistently opposed the implementation of DSTs, even imposing retaliatory tariffs on certain countries.

A digital services tax (DST) is a tax on the gross revenues, the total amount a business earns, derived from the provision of digital services to users in a specific jurisdiction. It is typically imposed when a government is not able to receive adequate income tax payments from digital companies operating in their jurisdiction, compared to the value created for the companies by users based within their territories.
Companies with a global footprint typically pay income taxes where production occurs, or value is added rather than where consumers are located. In the global digital economy, large technology companies often have no physical presence in countries where they provide services or have users they derive value from. As a result, Big Tech companies can avoid paying taxes in such jurisdictions.

This implies that many countries stand to lose out on significant revenue, particularly given the growing size of the digital economy and its monopolization by companies from major economies. The countries where these digital multinationals are based can choose to tax these companies as they please (though often, lobbying by Big Tech companies leads to insufficient taxation even in countries such as the U.S., which is said to provide several unwarranted tax breaks to them).

Canada has been considering the implementation of a DST for several years, with the U.S. government opposing such proposals since 2019. Canada held off from implementing a DST in view of the progress of the BEPS framework. However, given the political stalemate at multilateral negotiations, on June 20, 2024, the government enacted Bill C-59, which imposes a 3 percent tax on revenues relating to online marketplaces (e.g., online auctions, e-commerce, ride-sharing, etc.), online targeted advertising, social media platforms (excluding platforms solely for communication) and sale/licensing of user data.