The Canadian Digital Services Tax

Research output: Working paper


The Digital Services Tax (DST) may never be enacted in Canada. At least that seems to be what most Canadian tax professionals hope for: the draft Digital Services Tax Act (DSTA), released by the federal government in December 2021, has received little meaningful commentary; likely few Canadian taxpayers potentially affected by the DSTA (and their tax advisors) have attempted to learn from experiences of DST compliance in other countries; and the world also has little to learn from Canadian taxpayers’ preparation for a potential DST. This essay highlights three ways in which this collective dismissal of Canada’s proposed DST is remarkable. First, the Canadian DST is much broader in scope than its U.K. and French counterparts. Ironically, this significantly larger scope not only has drawn no attention from commentators, but also seemed to generate no greater opposition to the DST than elsewhere. The usual opponents of the DST copied and pasted the same accusations against the Canadian DST as they had launched against other DSTs, even though the accusations are manifestly inapplicable. Second, the DSTA raises important new questions about DST design, especially in connection with taxing business-to-business and social media platforms, that may not be just technical in nature but require debate on the DST’s purpose. Such debate has not transpired in Canada. Third, since the DST’s first enactment in 2019, the world has been plagued by other larger, and seemingly intractable, trade disputes. Yet the global tax profession continues to be fixated on the pettier trade dispute that DSTs have generated: this ability to mentally separate international taxation from larger economic realities may explain why global tax cooperation seems to unite the global tax profession more than anything else.

Original languageUndefined/Unknown
Publication statusPublished - Jan 1 2023

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