Ottawa, Canada (Reuters) – Finance Minister Chrystia Freeland stated that Canada sees a way to achieve global consensus on digital services taxes. The decision to not support a global agreement on delaying domestic taxes was made in the national interest.
Most countries with planned digital services taxes agreed to postpone their implementation for an additional year due to the delay in reaching a global tax deal. However, Ottawa chose not to endorse the extension, citing the disadvantage it would pose to Canada compared to countries already collecting revenue under existing digital services taxes.
“At this point, defending our national interest is crucial. We agreed to a two-year pause,” said Freeland during a call with reporters from New Delhi, where she is attending G7 and G20 meetings.
Freeland expressed that she had constructive discussions on finding a way forward regarding digital services taxes during her trip to India. She emphasized the importance of reaching an international consensus while also safeguarding Canadian interests.
“We explained our position in face-to-face conversations… Our partners comprehend our approach and the reasons behind Canada’s stance,” she added.
Over 140 countries were scheduled to implement a 2021 agreement that revamps long-standing rules on how multinational companies are taxed. These rules have now become outdated as tech giants like Apple and Amazon can generate profits in low-tax nations.
However, due to the protracted process, the more than 30 governments that have introduced or planned national digital services taxes agreed to postpone their implementation until the end of this year. Some countries may even abandon these taxes once the first phase of the tax deal is finalized.
“We fully support international efforts to reach a tax agreement, and Canada is already in the process of implementing pillar two,” stated Freeland. “We strongly endorse the completion and implementation of pillar one as well.”
The first part of the two-pillar deal aims to redistribute the rights of taxation on approximately $200 billion in profits from large multinational corporations to the countries where they generate sales. The second pillar calls for an end to tax competition between nations by establishing a global minimum corporate tax rate of 15% starting next year.
Reporting by Ismail Shakil and Steve Scherer in Ottawa; Additional reporting by David Ljunggren in Ottawa; Editing by Matthew Lewis
Credit: The Star : Tech Feed
