Canadian Finance Minister Chrystia Freeland expressed cautious optimism on Tuesday regarding the resolution of a dispute with the United States over Ottawa’s proposed digital services tax (DST) targeting large technology companies.

Canada is upbeat about the US-Canada digital services tax agreement

Canada’s Deputy Prime Minister and Minister of Finance, Chrystia Freeland, talks to reporters on Parliament Hill in Ottawa, Ontario, Canada on September 19, 2023.

The digital services tax proposal is designed to tackle the issue of taxing digital giants such as Alphabet and that can record their profits in countries with low tax rates.

The U.S. government has consistently raised objections to Canada’s proposed tax, arguing that it unfairly targets American firms and has called on Ottawa to abandon the plan.

“I was in Washington last week, and we had productive discussions about the DST, both at the official level. I am cautiously hopeful that we can come to an agreement with our American counterparts,” Freeland informed reporters in Ottawa.

Canada had previously indicated that it was proceeding with its tax proposal earlier this year after postponing it for two years to await a global consensus on multinational taxation.

The negotiations for a global tax agreement have been slow, and they were further delayed in July to accommodate more discussions. Several countries, including Canada, have opted to hold off on implementing their DSTs for at least another year in line with the global deal instead of enacting their taxes.

The Canadian government argues that delaying the implementation of its DST for another year would place Canada in a less favorable position compared to countries that have already been generating revenue through their existing digital services taxes.

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