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The tax, which is similar to France’s new digital services tax that has irked the United States, would be applied to revenue generated through the sale of online ads and user data.

Last week, France and the European Union said they were ready to retaliate if U.S President Donald Trump acted on a threat to impose duties of up to 100 per cent on imports of champagne, handbags and other French products worth US$2.4 billion.

The tariff threat followed a U.S. government investigation that found France’s new digital services tax would harm U.S. technology companies like Alphabet Inc’s Google, Facebook Inc., Apple Inc and Amazon.com Inc .

Morneau said Canada will work with the Organization for Economic Co-operation and Development and other countries as it develops its proposed tax to ensure there are no loopholes.

“These companies are international and we want to make sure they pay their fair share of tax and don’t find a way around it,” the finance minister said.

Morneau also said Canada’s new Liberal minority government will present a fiscal update before Christmas, although no date has been set. Governments traditionally deliver updates late in the year to provide fresh forecasts and sometimes to unveil planned fiscal measures.

© Thomson Reuters 2019