Ottawa: Canada has announced the rescission of its controversial Digital Services Tax (DST), effective today, in a move aimed at restoring trade negotiations with the United States. The decision comes just days after US President Donald Trump abruptly halted talks in retaliation for the impending levy.
Canadian Prime Minister Mark Carney confirmed in a statement that he and President Trump have agreed to resume trade discussions, targeting a July 21, 2025, deadline established at this month’s G7 Leaders’ Summit in Kananaskis.
The Canadian levy, which was set to go into effect today, targeted technology firms by imposing a 3% tax on revenues generated from Canadian users, even if the companies lacked a physical presence in the country. This included major American tech giants such as Apple, Alphabet (Google), Amazon, and Meta.
President Trump had previously condemned the tax as “a direct and blatant attack on our country,” emphasizing that it specifically targeted “our American Technology Companies.”
Canada’s Digital Services Tax Act, which received Royal Assent on June 20, 2024, and came into force on June 28, 2024, was designed to address the issue of large multinational digital companies operating in Canada without contributing their perceived fair share of taxes. It was set to apply retroactively to revenues earned since January 1, 2022, with the first payments due today, June 30, 2025. The tax targeted firms with annual worldwide revenues exceeding €750 million (approximately $820 million USD) and Canadian revenues of over $20 million CAD.
The reversal signifies a critical step towards de-escalating trade tensions and facilitating progress in the broader economic and security partnership negotiations between Canada and the United States.
