WASHINGTON – United States Trade Representative Katherine Tai today announced that the United States has requested dispute settlement consultations with Canada under the United States-Mexico-Canada Agreement (USMCA) regarding Canada’s recently enacted digital service tax (DST).
“The United States opposes unilateral digital service taxes that discriminate against U.S. companies. USTR is taking action today to address Canada’s discriminatory policies,” said Ambassador Katherine Tai. “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.”
These consultations concern Canada’s Digital Services Tax Act, which is set out in Bill C-59, which was enacted on June 20, 2024. Canada’s DST appears to be inconsistent with Canada’s commitments under the Cross-Border Trade in Services and Investment chapters of the USMCA not to treat U.S. businesses less favorably than Canadian businesses.
Through these consultations, the United States will continue to work with the Government of Canada to resolve our concerns. If the United States and Canada are not able to resolve the United States’ concerns through consultations within 75 days, under USMCA rules the United States may request the establishment of a USMCA dispute settlement panel to examine the matter.
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