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OTTAWA — Canada’s promised Digital Services Tax targeting the world’s biggest tech and social media giants will bring in double the amount of revenue as previously estimated, according to the Parliamentary Budget Officer.

In a report released Tuesday morning, the PBO said the tax would “increase federal government revenues” by $7.2 billion over five years. Previous estimates put that number at $3.4 billion over five years.

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The U.S. has warned of retaliation if Canada goes ahead with the Digital Services tax before an OECD deal is in place. But it’s unclear whether that stance will change now that the United States confirmed Monday it will itself miss the OECD-set deadline to sign the treaty.

The digital services tax was first promised in the 2021 budget and would be retroactive to Jan. 1, 2022. It targets large companies that operate online marketplaces, social media platforms and earn revenue from online advertising, such as Amazon, Google, Facebook, Uber and Airbnb. The PBO estimates are for the 2023 to 2028 time period.

The three per cent tax on Canadian digital services revenues over $20 million would apply to companies with global revenues of more than 750 million euro, or about $1.08 billion.

The PBO noted Tuesday its estimates come with a “high degree of uncertainty.”

“It is also expected that businesses in the targeted sectors will adjust their services and prices in response to the new law. In addition, this analysis does not consider the fact that the government will have to deploy additional resources to track transactions in Canada since this data is not currently collected.”

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The tax was only meant to kick in if a multilateral process at the OECD, meant to replace unilateral digital services taxes in individual countries, wasn’t in place by 2024. The OECD agreement sets up rules enabling countries to tax the largest multinational digital companies and establishes a minimum global corporate tax.

This summer OECD countries said they would delay implementing their own taxes by another year, though Canada was one of the few outliers to that agreement, a move experts said at the time could break the “fragile” deal.

David Cohen, the U.S. ambassador to Canada, has warned the U.S. could target digital trade if it decides on retaliatory measures, while in September, dozens of members of the United States Congress called Canada’s plans to impose the tax a “risky” choice that could damage U.S.-Canada relations.

But on Monday, Treasury Secretary Janet Yellen said the U.S. won’t be ready to sign the OECD deal on time, a move that could trigger a number of other countries to introduce their own unilateral digital service taxes.

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