Joe Biden asked to take strong action against Canada’s digital tax – International Tax News, Transfer Pricing News – TP News

The US Ways and Means Republicans have called on the Biden Administration to take swift and strong steps against Canada’s decision to impose a discriminatory digital services tax (DST) on US businesses.

In their July 11 letter to United States Trade Representative (USTR), Ambassador Katherine Tai, Republicans on the US Ways and Means Committee urged the Biden Administration to utilize authorities under Section 301 of the Trade Act to send a strong response to Canada, given the threat the DST poses to US businesses.

The letter states: “Given Canada’s decision to enact its DST on June 19, despite significant US concerns expressed by Congress, USTR, and the Treasury Department, the time has come to make clear to Canada’s political leadership that the United States is done examining options and will act decisively to protect American workers, small businesses, and innovators.”

The letter adds: “We support continued engagement with the Government of Canada regarding DST implementation. To date, however, talks have been ineffective and Canada has not changed course at all. We strongly urge you to make clear that unilateral and discriminatory DSTs are unacceptable and immediately initiate an investigation under Section 301.”

The letter notes that a “weak response from the Biden Administration will harm American interests, lead to a proliferation of similar measures, and allow Chinese companies to gain a foothold in the markets of our closest trading partners.”

The letter concludes: “As you know, Section 301 gives USTR ample authority to take action against unreasonable or discriminatory acts that burden or restrict US commerce. In fact, thanks to aggressive action by the prior administration, between 2019 and 2021, USTR investigated the harmful DSTs implemented by other countries, creating a path for USTR to respond quickly in this instance.”

“Without swift action, the United States will not be ready to immediately retaliate when Canada’s discriminatory DST is applied. This is especially concerning because of the potential retroactive application of the DST,” it notes.

The letter was signed by every Republican on the Committee.