On 4 August 2023, the Department of Finance Canada published a revised draft of the Digital Services Tax (DST) Act for public consultation.
These legislative proposals would implement the Digital Services Tax Act. The Act would impose a tax of 3% on revenues derived by residents and non-residents of Canada from certain digital services they provide. The targeted revenues are generally those that arise in connection with the digital service providers’ engagement with online users in Canada. These revenues include certain revenue relating to online marketplaces, online targeted advertising, social media platforms and the sale or licensing of user data.
The tax is aimed at large businesses with global consolidated revenues of €750 million or more and Canadian digital services revenue of more than $20 million. The DST Act will come into force on a day to be fixed by order of the Governor in Council, but not earlier than 1 January 2024. The tax will apply on a calendar year basis, beginning with the year that includes the day that the DST Act comes into force. For the first year that the tax applies, tax liability will be calculated by reference to certain Canadian digital services revenue earned from 1 January 2022, up to and including that first year.
Stakeholders are invited to provide feedback on the draft Digital Services Tax (DST) Act by 8 September 2023.
