Google Adds 2.5 Percent Surcharge on Canadian Ads in Response to Digital Services Tax

Google will implement a surcharge for ads served in Canada to help it pay for Ottawa’s new Digital Services Tax (DST), the tech giant has announced.

“As of Oct. 1, 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. Google said the DST charge is being added to cover “part of the cost of complying with Digital Services Tax legislation in Canada.”

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. According to Canada’s Parliamentary Budget Officer, the implementation of the DST would raise $7.2 billion in the next five years.

The Canadian government agreed in October 2021 to pause the tax’s implementation until the end of 2023. Ottawa later said it would not go along with the two-year deferral period, however, and the tax took effect in January 2024. It is retroactive to the beginning of 2022.

The federal government said it would be put at a disadvantage if it continued to defer the tax compared to 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 the countries 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 said in an Aug. 1 X post 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.

During a July 30 press conference, Deputy Prime Minister Chrystia Freeland defended her government’s new tax scheme, saying 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.

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Google Adds 2.5 Percent Surcharge on Canadian Ads in Response to Digital Services Tax

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