Canada has withdrawn its digital services tax in an effort to progress trade talks with the United States. This decision comes after US President Donald Trump had previously suspended negotiations in response to the proposed levy.
Canadian Prime Minister Mark Carney announced in a statement on Sunday that he and Trump have agreed to resume trade talks.
Carney stated, “Today’s announcement supports the restart of negotiations, aiming to meet the July 21, 2025, timeline established during this month’s G7 Leaders’ Summit in Kananaskis.”
The implementation of Canada’s levy on technology companies was scheduled to take effect on Monday.
Trump had previously referred to the tax as a “direct and blatant attack on our Country” and expressed opposition to it targeting “our American Technology Companies.”
The US is home to some of the world’s largest technology companies, such as Apple, Alphabet/Google, Amazon, and Meta.
Under Canada’s Digital Services Tax Act (DSTA), a levy would have been imposed on tech revenues generated from Canadian users, even if providers lacked a physical presence in the country.
The Act required technology firms with global revenues exceeding $820 million and Canadian revenues over $14.7 million to pay a 3% levy on certain digital service revenues earned in Canada.
Unlike traditional corporate taxes based on profits, this tax specifically targeted gross revenue linked to Canadian user engagement.
The levy applied to various digital services, including online marketplaces, social media platforms, digital advertising, and the sale or licensing of user data.
A highly disputed aspect of the new framework for businesses was its retroactive nature, which demanded payments on revenues dating back to January 1, 2022.
Source: https://www.aljazeera.com/news/2025/6/30/canada-rescinds-digital-services-tax-after-trump-suspends-trade-talks?traffic_source=rss
