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Canada

2 October 2019

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Canada's Liberal and Green Parties Propose Digital Services Tax and Robot Tax Ahead of Elections

As part of its reelection campaign, Canadian Prime Minister Justin Trudeau’s Liberal Party has published its platform, Forward - A Real Plan for the Middle Class, which includes the introduction of a new digital services tax on revenue generated in Canada by international digital corporations. While the platform document provides no details for the tax, a separate cost estimate published by the Office of the Parliamentary Budget Office includes the following description for the taxation of large technology companies:

This proposal would introduce a new 3% tax on the income of businesses in certain sectors of the digital economy. This policy would replicate the proposed digital services tax announced by the French government. It would be implemented on 1 April 2020.

The tax would target only the following services: targeted advertising services and digital intermediation services. The tax would apply only to businesses with worldwide revenues of at least CAD 1 billion and Canadian revenues of more than CAD 40 million. The new tax would act as a value-added tax.

Further to the digital services tax, Canada's Green Party has announced its own proposals, including for a so-called "robot tax" to protect workers displaced by automation. According to a release from the party, the proposal includes that companies would be required to pay a tax equivalent to the income tax paid by a laid-off employee that is replaced by a machine. The revenue from the robot tax would be used to fund educational and retraining programs for displaced workers.

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