Canada announces legislation to implement digital services tax

On 28 November 2023, Ms. Chrystia Freeland, Deputy Prime Minister and Minister of Finance, tabled the Notice of Ways and Means Motion to introduce the Fall Economic Statement Implementation Act, 2023.

This legislation, which delivers on key measures from the 2023 Fall Economic Statement, advances the government’s economic plan to make life more affordable, build more homes, faster, and build an economy that works for everyone.

The measures include legislation to implement a 3% digital services tax (DST). The DST will apply retroactively from 1 January 2022 but will not enter force unless there is an order from the Governor in Council, which cannot be earlier than 1 January 2024.

Canada’s legislation allows flexibility in implementing the DST, aligning with their preference for a multilateral approach to taxing digital services under the OECD’s two-pillar solution. However, if progress in the multilateral approach is not made, the DST will be implemented.

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