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ARTICLE · 29 DECEMBER 2021

Federal Government Releases Draft Digital Services Tax Legislation

Osler, Hoskin & Harcourt LLP
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On December 14, 2021 the federal government released draft legislation to implement a digital services tax (DST). The DST was originally proposed in the 2021 Federal Budget.

CanadaTax
Gregory Wylie
Gregory Wylie
Ilana Ludwin
Ilana Ludwin
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In this update:

  • Draft legislation for the proposed digital services tax (DST) was released on December 14, 2021
  • The DST is not expected to apply if a multilateral Pillar One agreement is reached by the end of 2023
  • The DST will be a 3% tax on Canadian-source revenue relating to digital services in excess of $20 million earned by an individual entity or consolidated group with at least €750 million in global revenue
  • Any taxpayer that has Canadian digital services revenue in a calendar year and meets or is part of consolidated group that in that year or any prior calendar year as of 2022 (i) meets the €750-million global revenue requirement and (ii) earns at least $10 million of Canadian digital services revenue will have to register under the DST

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