Washington D.C. – The National Foreign Trade Council (NFTC) today joined a number of leading industry associations in calling for a robust response from the United States once Canada enacts its digital services tax (DST).
“As Canada’s Parliament continues to rush forward with its discriminatory and retroactive DST, the United States must be prepared to respond,” said Tiffany Smith, NFTC Vice President for Global Trade Policy. “That is why we are calling on Ambassador Tai to seek dispute settlement consultations under the United States-Mexico-Canada Agreement (USMCA) to ensure Canada complies with its USMCA obligations and to defend the interests of U.S. companies operating in Canada.”
The letter reads, in part: “Although determining the specific economic effect on U.S. firms may not yet be possible given lack of implementing rules, industry is already feeling the effects of Canada’s decision. Many companies have begun the costly and burdensome process of preparing for incipient tax liability. Moreover, as underscored by previous 301 investigations regarding DSTs, the tax will also negatively affect U.S. startups, small businesses, and consumers, in the form of increased prices for critical services on which they rely. In short, firms are already experiencing the harms of the law, and the clear outlines of Canada’s intent now create the basis for a legal response.”
“Canada still has time to avoid creating an unnecessary trade dispute with its closest ally and largest trade partner and jeopardizing the finalization of the Pillar One negotiations at the OECD,” added Smith. “We strongly urge Canada to reconsider implementation of the DST and to continue actively engaging in the OECD Inclusive Framework Pillar One negotiations before violating its obligations by enacting this unilateral measure.”
Along with NFTC, the letter was signed by Coalition of Service Industries (CSI), Computer & Communications Industry Association (CCIA), Consumer Technology Association (CTA), Engine, Information Technology Industry Council (ITI), Software & Information Industry Association (SIIA), TechNet, U.S. Chamber of Commerce, and U.S. Council on International Business (USCIB).
Read the full text of the letter here.
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About the NFTC
The National Foreign Trade Council (NFTC) is the premier business association advancing trade and tax policies that support access to the global marketplace. Founded in 1914, NFTC promotes an open, rules-based global economy on behalf of a diverse membership of U.S.-based businesses.
