Canada plans to impose a tax on corporations providing digital services from 2022 that will stay in place until major nations come up with a coordinated approach on taxation, the Finance Department said on Monday.
The Organisation for Economic Cooperation and Development is working on a common approach to ensure digital behemoths, such as Alphabet Inc’s Google and Facebook Inc, pay their share of taxes as the coronavirus hammers budgets.
Canada said it was concerned about a delay in reaching agreement. The threat of digital services taxes has prompted threats of trade retaliation from outgoing U.S. President Donald Trump’s administration.
The new tax would come into effect on Jan. 1, 2022, and remain in place until a common approach is agreed upon. The measure would raise federal revenues by C$3.4 billion ($2.6 billion) over five years, starting in the 2021-22 fiscal year.
“Canadians want a tax system that is fair, where everyone pays their fair share,” Finance Minister Chrystia Freeland told legislators in the fall economic update.
“Canada will act unilaterally, if necessary, to apply a tax on large multinational digital corporations, so they pay their fair share just like any other company operating in Canada.”
More details are due in next year’s budget.