US fights Canada over new tech tax that could cost Apple billions

AppleInsider

Canada's new Digital Services tax could cost iPhone maker Apple billions, but the US says the fees are discriminating against American tech companies -- and is pushing for a delay.

The US Trade Representative object to Canada's unilateral Digital Services Tax.

Canada first proposed the legislation in 2021 as an interim measure, following a statement from the G20 allowing for international digital service tax (DST) reform. The G20 countries have been working together to create a multilateral tax on profits made by global tech companies through services, but progress has been slow.

Canada and other countries want to be able to impose taxes on profits made from online marketplace services, advertising services, social media services, and revenue made from selling user data. To qualify under the Canadian law, a tech company would have to have made $750 million or more in qualifying revenue per year, of which at least $20 million would have come directly from Canadian users.

The US objects to the interim DST from the Canadian government on the grounds that it discriminates against US-based companies. Nearly all of the biggest global tech players -- including Apple, Microsoft, Google, Amazon, and Meta among others -- are based in the US.

Disagreement could result in trade tariffs

The Biden administration has noted that, if passed, such an interim tax structure may violate the rules of the North American Free Trade Agreement. It has requested trade dispute settlement consultations with Canada.

If US Trade Representative Katherine Tai cannot reach an agreement to resolve US concerns about the Canadian tax within 75 days of the consultations, she could request a settlement panel under the US-Mexico-Canada Agreement (USMCA). The dispute might conceivably lead to retaliatory US tariffs on imports from Canada.

The US has previously prepared tariffs on seven other countries that have already passed digital service tax legislation -- Austria, Britain, France, India, Italy, Spain and Turkey -- but these have been suspended pending the outcome of global negotiations on a worldwide distributed DST agreement.

Tai has said that the US "opposes unilateral digital service taxes that discriminate against US companies. As we pursue these consultations, we will continue to support the Department of the Treasury in the OECD/G20 global tax negotiations to bring a comprehensive solution to the challenge of DSTs."

If successful in negotiations, Canada's DST legislation could take effect later this year, and amounts owed by tech companies would be backdated to January 1, 2022. The Canadian legislation is seen by some as a negotiating tactic to spur progress on the global G20 tax reform proposals affecting digital services.



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TravisV

" selling user data". They should be more concerned about "user data" getting hacked. It seems that a week doesn't go by without some article appearing on some  site, like the Hacker News, Bleeping Computer or darkreading telling us that  some site got hacked and people personal information was downloaded and now is for sale on the dark web. 

rob53

Maybe it's about time the USA starts charging Canadian "visitors" every time they come across the border to buy gas and groceries at a big discount over Canadian prices. Check the Costco gas station in Bellingham, WA, and see how many cars with BC plates are there. Let's also start charging taxes or tariffs on semi truck trailers having free reign on USA highways. 

headfull0wine

If Apple wants to assert its right to a piece of third party transactions in Europe because it owns the platform, then countries can claim their right to a piece of their citizens transactions. 

It cuts both ways. 

VictorMortimer

TravisV said:

" selling user data". They should be more concerned about "user data" getting hacked. It seems that a week doesn't go by without some article appearing on some  site, like the Hacker News, Bleeping Computer or darkreading telling us that  some site got hacked and people personal information was downloaded and now is for sale on the dark web. 

Not sure what the difference is.  Hacked or sold, the data has gone somewhere it shouldn't have.

Maybe ban collecting it in the first place.

oscarg

Sounds like another "Netflix tax." Pathetic.

22july2013

Canada's taxes on Canadians are a lot higher than America's taxes on Americans. America shouldn't expect their tax system to rule the world outside their borders.

Sigsgaard

Taxes needs to be payed where the money is earned, not to be dodged by paying where it is cheapest. Multinationals needs to be treated like you and me - if I try to dodge paying taxes by moving my money to a tax shelter, I will end up paying very high fines and/or going to jail.

gatorguy

Sigsgaard said:

Taxes needs to be payed (sic) where the money is earned, not to be dodged by paying where it is cheapest. 

+1 

marklark

Taxes will be paid by the customers. Hopefully by those of the country imposing them. 

Scot1

rob53 said:

Maybe it's about time the USA starts charging Canadian "visitors" every time they come across the border to buy gas and groceries at a big discount over Canadian prices. Check the Costco gas station in Bellingham, WA, and see how many cars with BC plates are there. Let's also start charging taxes or tariffs on semi truck trailers having free rein on USA highways. 

As a Canadian who lives in White Rock BC, (next to the US boarder), you are correct, many Canadians on this side dodge the expensive gas by driving across the border. I won’t. You see, that expensive gas has a large carbon tax included to fight global warming and also includes a large transit tax that helps pay for the skytrain and hydrogen busses that move is around the Vancouver lower mainland. I have a few shares in Apple and am a bit of a fanboy. The digital tax, in my opinion, is reasonable. What the article doesn’t point out is that several other countries also have a similar tax and that there is a global agreement being negotiated that includes the US, but no consensus has been reached to date. Canada, with a population of 41 million, one tenth of the US decided to take a stand and acted unilaterally after several years of delay. 

And by the way, the gas some of my neighbours purchase south of the boarder comes from Canadian oil which is then refined at Arco BP refinery near Birch Bay, WA. and then shipped north to sell back to us. 

Canadians are America’s’ best friends. Sorry we hurt your feelings. 

Nachtswaermer

rob53 said:

Maybe it's about time the USA starts charging Canadian "visitors" every time they come across the border to buy gas and groceries at a big discount over Canadian prices. Check the Costco gas station in Bellingham, WA, and see how many cars with BC plates are there. Let's also start charging taxes or tariffs on semi truck trailers having free reign on USA highways. 

I think that's a great idea! Nobody from Blaine to Seattle wants those Canadian shopping dollars anyways!

mike1

Scot1 said:

rob53 said:

Maybe it's about time the USA starts charging Canadian "visitors" every time they come across the border to buy gas and groceries at a big discount over Canadian prices. Check the Costco gas station in Bellingham, WA, and see how many cars with BC plates are there. Let's also start charging taxes or tariffs on semi truck trailers having free rein on USA highways. 

As a Canadian who lives in White Rock BC, (next to the US boarder), you are correct, many Canadians on this side dodge the expensive gas by driving across the border. I won’t. You see, that expensive gas has a large carbon tax included to fight global warming and also includes a large transit tax that helps pay for the skytrain and hydrogen busses that move is around the Vancouver lower mainland. I have a few shares in Apple and am a bit of a fanboy. The digital tax, in my opinion, is reasonable. What the article doesn’t point out is that several other countries also have a similar tax and that there is a global agreement being negotiated that includes the US, but no consensus has been reached to date. Canada, with a population of 41 million, one tenth of the US decided to take a stand and acted unilaterally after several years of delay. 

And by the way, the gas some of my neighbours purchase south of the boarder comes from Canadian oil which is then refined at Arco BP refinery near Birch Bay, WA. and then shipped north to sell back to us. 

Canadians are America’s’ best friends. Sorry we hurt your feelings. 

The US can and should then simply tariff the hell out of Canadian lumber, oil/natural gas as well as the automobiles manufactured there. These will harm Canadians a lot more than the American consumers. Same goes for all the EU countries.

chasm

For the record, the part of Canada I am currently in sells gas for C$1.75 per litre. Pay attention to that, Americans: it’s not French for “gallon.”

C$1.75 converts to US$1.29. Now we multiply $1.29 x 3.72 to get the US equivalent of Canada’s current price per gallon, and we get … $4.80 per gallon.

Right now, the average price of gas in the US is $3.33 per gallon (this varies from state to state, but that’s a national average for the day I’m writing this, provided by AAA). So yes, people who have easy access to US gas stations like White Rock may indeed be driving across the border to say $1.50 per gallon on gas.

If the situation were reversed, Americans near the Canadian border would actually get a passport to get $1.50 per gallon cheaper gas in White Rock and other border towns, don’t even kid yourselves about it.

The thing Mike and Rob don’t appear to understand is that when Canadians drive down to get cheaper gas, they are still paying ALL the taxes the US puts on gasoline. That $3.33 per gallon includes federal, state, and local taxes, so when a Canadian buys gas down south, the US benefits. Particularly given the current exchange rate!

Chances are very high that said Canadian will not just turn around and go home, but will have a meal, shop, maybe spend the weekend down south. More revenue and tax money your county/state/country wouldn’t have gotten otherwise.

To borrow a phrase from the American south, “quitcher bellyachin’.”

Nachtswaermer

mike1 said:

Scot1 said:

rob53 said:

Maybe it's about time the USA starts charging Canadian "visitors" every time they come across the border to buy gas and groceries at a big discount over Canadian prices. Check the Costco gas station in Bellingham, WA, and see how many cars with BC plates are there. Let's also start charging taxes or tariffs on semi truck trailers having free rein on USA highways. 

As a Canadian who lives in White Rock BC, (next to the US boarder), you are correct, many Canadians on this side dodge the expensive gas by driving across the border. I won’t. You see, that expensive gas has a large carbon tax included to fight global warming and also includes a large transit tax that helps pay for the skytrain and hydrogen busses that move is around the Vancouver lower mainland. I have a few shares in Apple and am a bit of a fanboy. The digital tax, in my opinion, is reasonable. What the article doesn’t point out is that several other countries also have a similar tax and that there is a global agreement being negotiated that includes the US, but no consensus has been reached to date. Canada, with a population of 41 million, one tenth of the US decided to take a stand and acted unilaterally after several years of delay. 

And by the way, the gas some of my neighbours purchase south of the boarder comes from Canadian oil which is then refined at Arco BP refinery near Birch Bay, WA. and then shipped north to sell back to us. 

Canadians are America’s’ best friends. Sorry we hurt your feelings. 

The US can and should then simply tariff the hell out of Canadian lumber, oil/natural gas as well as the automobiles manufactured there. These will harm Canadians a lot more than the American consumers. Same goes for all the EU countries.

Um  You're a little behind on the curve there sport!     https://www.cbc.ca/news/canada/british-columbia/canadian-softwood-lumber-us-duty-1.7294054

Typical knee-jerk reaction.                                                                              

U.S. nearly doubles duty on Canadian softwood lumber.