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Canada follows its own true north on tech policy

Ashley Gold
Aug 10, 2023
illustration of a neon colored grid with images of a gavel, the canadian maple leaf and binary code

Illustration: Tiffany Herring/Axios

The U.S.' northern neighbor is going it alone on a number of tech policy fronts, bucking international cooperation.

Driving the news: Canada released a note last week about its Digital Services Tax Act, set to go into effect as soon as January, which would impose a 3% tax on revenue for large tech companies and online marketplaces.

  • That would include companies like Walmart, Amazon and Meta.
  • Members of Congress have considered similar proposals, while the U.S. is helping lead an international strategy for digital tax.
  • Meta also began blocking news in Canada this month in response to a law requiring tech companies to pay news outlets for content.

Why it matters: Canada's zagging is sure to complicate conversations among G7 nations about norms for tech policy, and cause headaches for companies with a presence in the country.

  • In July, countries considering digital services taxes agreed to hold off applying them as an international deal is worked out, but Canada moved ahead on its own, per Reuters.

What they're saying: "The importance here of Canada moving forward is it's going to make it harder to get a lateral agreement, period," one tech industry insider told Axios. "It's breaking down one of the largest economic agreements we've ever seen."

  • Canada's note "shows that Canada's DST is clearly discriminatory towards U.S. companies and will harm international efforts to come to a global consensus on issues of taxation in the digital economy," National Foreign Trade Council vice president for international tax policy Anne Gordon said in a statement.

The other side: Canada's deputy prime minister Chrystia Freeland said in a statement Canada supports an international agreement but could not support an extended "standstill" of any multilateral agreement.

What to watch: Canada has also workshopped controversial policies on AI and data, online privacy protections and requirements for social media and streaming companies to carry a certain amount of Canadian content.

  • Parliament is currently considering a package that would implement three new laws around data protection and privacy along with AI.
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