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October 14, 2021

Canada announces it will enact Digital Services Tax but says implementation is conditional

On October 8, following the announcement the same day of the international agreement reached by the Organisation for Economic Co-operation and Development (OECD) on the core design features of the two-pillar solution developed in the Base Erosion and Profit Shifting (BEPS) 2.0 project, Deputy Prime Minister and Finance Minister Chrystia Freeland issued a statement confirming that the federal government intends nevertheless to move ahead with legislation finalizing the enactment of a Digital Services Tax (DST) by January 1, 2022. This step is in keeping with a proposal first announced in the 2020 Fall Economic Statement and again in Budget 2021. However, the statement added that the DST would only be imposed as of January 1, 2024, rather than January 1, 2022 (as originally announced), and only if the convention implementing the BEPS 2.0 tax regime under the international agreement has not come into force by December 31, 2023.

A Tax Alert prepared by Ernst & Young Canada, and attached below, provides additional details.


Full text of Tax Alert