Canada's Digital Services Tax Act: Issues Facing Congress (CRS Report for Congress)
| Release Date |
Aug. 1, 2024 |
| Report Number |
IN12399 |
| Report Type |
Insight |
| Authors |
Kyla H. Kitamura; Danielle M. Trachtenberg |
| Source Agency |
Congressional Research Service |
Summary:
In June 2024, the Canadian government enacted Bill C-59, which included a 3% digital services tax
(DST)—retroactive to January 1, 2022—on certain revenue of large digital services providers active in,
for example, online marketplaces, online advertising, social media platforms, and the sale or licensing of
user data. Some Members of Congress have expressed concerns that Canada’s DST discriminates against
U.S. firms and have urged the Biden Administration to consider retaliatory trade measures.
The United States is home to several of the world’s largest digital services providers (e.g., Meta, Netflix),
which are a large and fast-growing segment of the U.S. economy, with $213 billion of revenue and
278,000 workers in 2024. Revenue for social networking sites is expected to increase by 18% from 2024
to 2025. Digital services providers will have to register with the Canadian Revenue Agency by January
31, 2025, and make their first tax payments by June 30, 2025.
