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Canada optimistic about digital services tax agreement with US

OTTAWA: Canadian Finance Minister Chrystia Freeland said on Tuesday she was cautiously optimistic about settling a dispute with the United States about Ottawa’s planned digital services tax (DST) on large technology companies.

The digital services plan aims to address the challenge of taxing digital giants like Alphabet and Amazon.com that can book their profits in low-tax countries.

The US government has repeatedly objected to the planned Canadian tax. Washington says it unfairly singles out US firms, and urged Ottawa to scrap the plan.

“I was in Washington last week and we did have some good conversations about the DST, including at officials level. I remain cautiously optimistic that we’ll be able to reach an understanding with our American partners,” Freeland told reporters in Ottawa.

Canada earlier this year said it was moving ahead with its taxation plan after holding off for two years to allow for a global consensus on taxing multinationals.

The process of negotiating a global tax deal has dragged on, and it was pushed back further in July to allow for more negotiations. Countries other than Canada that have a DST agreed to wait for the global deal for at least another year, instead of implementing their taxes.

Ottawa says not implementing its DST for another year would put Canada at a disadvantage relative to countries that have been collecting revenue under their pre-existing digital services taxes.

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