Google will implement a surcharge for ads served in Canada to help the company pay Ottawa’s new Digital Services Tax (DST), the tech giant has announced.
“As of 1 October 2024, we will begin adding a new ‘Canada DST Fee’ surcharge to your next invoice or statement for ads served in Canada,” the tech giant said in a
recent email sent out to online creators.
The new 2.5 percent fee will apply to all ads served in Canada. The DST charge is “being added to cover part of the cost of complying with Digital Services Tax legislation in Canada,” Google said on its
Google Ads Help webpage.
The DST is a 3 percent levy aimed at foreign companies—many of which are based in the United States—that receive revenue from Canadian subscribers and contributors.
In an October 2023
report, Canada’s Parliamentary Budget Officer estimated that implementation of the DST will raise federal government revenues by
$7.2 billion over five years.
Ottawa
originally proposed the DST in the 2020 Fall Economic Statement and presented further details in Budget 2021. The government said the tax was an interim measure to apply until an acceptable multilateral agreement comes into effect to address the issue through international negotiations among the members of the Organisation for Economic Co-operation and Development (OECD).
The federal
government agreed in October 2021 to pause the tax’s implementation until the end of 2023 and only impose it if no multilateral approach has come into force by then.
When no multilateral solution was reached by the end of 2023, Ottawa moved ahead to put its own measures in place. The DST was included in
Bill C-59, which received royal assent on June 20 this year, and June 28 was fixed as the coming-into-force date.
The tax retroactively applies to online revenues earned as of Jan. 1, 2022
The federal government said it would be put at a
disadvantage if it continued to defer the tax while countries that currently collect revenue under their
pre-existing DSTs.
The United States has repeatedly voiced its opposition to Canada’s refusal to delay the DST, wanting to establish a unified approach for a minimum tax level that would prevent multinational companies from exploiting tax rules through aggressive tax-planning strategies.
University of Ottawa law professor Michael Geist wrote in a
post on X on Aug. 1 that Canada’s “go-it-alone” approach to the DST had always carried the risk that the costs would be passed along to Canadian businesses which, ultimately, would be passed along to consumers.
At a July 30 press conference, Deputy Prime Minister Chrystia Freeland defended her government’s new tax scheme, saying that many countries such as the UK and France have had similar taxes in place for some time already.
“I can’t accept Canada permanently being in a discriminated position,” she said.
