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Canada 3% Digital Services Tax Jan 2024

Updated legislative proposal for DST comes into effect if no agreement on OECD tax reforms

Canada has issued revised legislation for the introduction of a 3% Digital Services Tax (DST) on large companies from 2024. It would apply retrospectively for in-scope income from 1 January 2022 onwards.

Interested parties may comment of the proposed legislation until 8 September 2023.

Canada was one of the few countries to decline freezing the introduction of its proposed DST following the recent agreement to a 1-year freeze pending a successful Pillar 1 of the OECD talks138 countries agreed to the pause; only five, including Canada declined.  Canada has indicated that it would not proceed with the tax if Pillar 1 talks reach a successful conclusion by 31 December 2023.

The new tax on large companies’ income from data and content contribution by Canadian users would become liable from 1 January 2022. This would include digital advertising, online marketplaces, social media and the sale/licensing of user data. The new version of the proposed legislation includes an option to elect for a simplified calculation for 2023-23 as businesses adjust to the new tax.

The thresholds for having to start collecting the taxes would be:

  • Global revenues above €750m as per the OECD’s model; and
  • Canadian revenues above CAD20m

This comes as Canada imposed 5% GST on digital services sales to consumers from 1 January 2021. Check VAT Calc’s Global Digital Services Tax  Tracker to see which other countries have proposed and implemented such tax.

Americas Digital Services Taxes (DST)

Country Status Rate Annual sales threshold Scope
In-country income Global income
Argentina Dec 2020 5%, 10%, 15% Online gambling
Brazil - 1 Proposed 1-5% BRL 100m BRL 3bn Advertising; user data; interfaces;
Brazil - 2 Proposed 3% on COFINS BRL 78m $240m Advertising; platform services for selling goods and services
Brazil - 3 Proposed 3% BRL 4.5bn Advertising; platform interaction services; data
Brazil - 4 Proposed 3% - 10% BRL 100m Media; apps; gaming; gambling (10%); software
Brazil - 5 Proposed 3% Advertising; user data; payment platforms; media
Canada Jan 2024 3% CAD 20m €750m Advertising, online marketplaces, social media and the sale/licensing of user data.
Colombia 2023 3% US$ 264k - Advertising; streaming or download media; user data; e-learning - Significant Economic Presence test
Costa Rica Nov 2019 Tourist accommodation rentals
Paraguay Jan 2021 4.5% Non-resident: media; gaming; data processing; advertising; gambling; software
Uruguay Jan 2018 12% Digital services Non-residents


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