Canadian digital services taxes on multinational tech companies will go into effect in 2024

The government budget confirmed that Canada will move forward with imposing a tax on digital services on major technology companies. The tax is expected to earn C$5.9 billion ($4.3 billion) over the course of five years, beginning with the fiscal year 2024–2025.

Canada had waited two years before allowing for the conclusion of negotiations on a global convention on taxing multinationals. The country wanted to address the issue of taxing digital giants like Alphabet, which owns Google, and Amazon.com, which can book their earnings in low-tax jurisdictions. The talks, however, are taking too long.

Washington opposes the proposal, arguing that it unfairly targets U.S. companies.

In light of ongoing delays internationally in implementing the multilateral treaty, Canada cannot afford to wait before taking action, as stated by the finance ministry in its annual budget.

The government is proceeding with its longstanding plan to implement a Digital Services Tax. The tax will come into effect for the 2024 calendar year, with the initial year covering taxable revenues earned since January 1, 2022.