Canada to move ahead with digital services tax plan: finance minister

Canada's Minister of Finance Bill Morneau speaks during Question Period in the House of Commons on Parliament Hill in Ottawa, Ontario, Canada, December 9, 2019. REUTERS/Blair Gable

OTTAWA (Reuters) - Canada will move forward with its plan to tax large, international digital companies, Finance Minister Bill Morneau said on Monday, even as the United States threatens to impose retaliatory tariffs on France because of a similar tax proposal.

“We’ve been very clear that we want to make sure that digital companies pay their fair share of taxes in our country. So that means we will move forward,” Morneau told reporters at a news conference.

Prime Minister Justin Trudeau’s government promised during Canada’s recent national election campaign to impose a 3% digital services tax on digital companies with worldwide revenues of at least C$ 1 billion ($752 million) and Canadian revenues of more than C$40 million, effective April 1.

The tax, which is similar to France’s new digital services tax that has irked the United States, would be applied to revenue generated through the sale of online ads and user data.

Last week, France and the European Union said they were ready to retaliate if U.S President Donald Trump acted on a threat to impose duties of up to 100% on imports of champagne, handbags and other French products worth $2.4 billion.

The tariff threat followed a U.S. government investigation that found France's new digital services tax would harm U.S. technology companies like Alphabet Inc's Google GOOGL.O, Facebook Inc. FB.O, Apple Inc AAPL.O and Inc AMZN.O.

Morneau said Canada will work with the Organization for Economic Co-operation and Development and other countries as it develops its proposed tax to ensure there are no loopholes.

“These companies are international and we want to make sure they pay their fair share of tax and don’t find a way around it,” the finance minister said.

Morneau also said Canada’s new Liberal minority government will present a fiscal update before Christmas, although no date has been set. Governments traditionally deliver updates late in the year to provide fresh forecasts and sometimes to unveil planned fiscal measures.

Reporting by Kelsey Johnson in Ottawa, additional reporting by David Ljunggren in Ottawa; Editing by Chris Reese and Dan Grebler