U.S. escalates efforts to halt Ottawa's digital services tax

The federal government says it's in close contact with its American partners as the Biden administration escalates efforts to halt Canada's tax on large foreign digital services companies.

The Office of the United States Trade Representative has requested dispute settlement consultations with Ottawa under the Canada-U.S.-Mexico trade agreement.

Americans have been critical of the three per cent levy on foreign tech giants that generate revenue from Canadian users.

It means the companies will have to pay taxes on that revenue in Canada.

U.S. Trade Representative Katherine Tai has previously called the tax discriminatory because many of those companies are based in the U.S.

A joint statement from Finance Minister Chrystia Freeland and International Trade Minister Mary Ng says consultation through the trade agreement is the appropriate forum to have further dialogue about the tax.