Canada's upcoming tax on foreign digital services, including Netflix, may be a source of tension for the U.S. tech sector, but Prime Minister Justin Trudeau suggests that President Joe Biden doesn't seem overly concerned about it.
In an end-of-year interview with The Canadian Press, Trudeau stated that Biden never indicated that the digital services tax, set to take effect on January 1, was a major worry for the White House.
Trudeau affirmed his readiness to defend the policy, even though it faces opposition on Capitol Hill. David Cohen, the U.S. ambassador to Canada, previously warned about the potential for a "big fight" over the three percent levy.
"I understand that Americans may not be very happy that we are going to do it, but we have promised to do it," Trudeau stated. He added that he was prepared with various responses if Biden had raised concerns about the upcoming tax.
The tax is designed to ensure that foreign tech giants earning revenue from Canadian users pay taxes on that income in Canada, primarily affecting U.S.-based companies.
"In all the conversations we had with the Americans, not once did President Biden raise that as a priority, a concern, directly with me," Trudeau noted.
The digital tax was a component of the Liberal election platform in the 2019 campaign, but the government postponed its implementation until 2024 to allow more time for global initiatives aimed at establishing a broader, multinational taxation plan.
A version of the first pillar of that plan, developed under the G20 and the Organization for Economic Co-operation and Development (OECD), was unveiled in October. However, the road to ratification, particularly in the U.S., remains a lengthy one.
"We gave them several years to try to resolve, to figure out a way for them and for everyone," Trudeau stated. "They haven't been able to do it. They tried."
France and the United Kingdom have chosen to forge ahead independently, a path that Cohen and members of Congress have vigorously urged Canada not to follow.
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