Canada rescinds digital services tax after Trump's threats

Canada has rescinded its new tax on the revenues of large technology companies derived from digital services (Digital Services Tax) in a bid to advance trade negotiations with the U.S., according to the website of the Canadian government.

Prime Minister of Canada Mark Carney and US President Donald Trump agreed to continue negotiations on a new economic partnership with a deadline of July 21, 2025.

The tax, which was supposed to take effect on June 30, was announced in 2020 to tax tech giants' revenues from Canadian users.

The report emphasizes that Canada prefers multilateral agreements related to the taxation of digital services.

"The repeal of the digital services tax will advance our negotiations on a new economic and security relationship with the United States and strengthen our work to create jobs and prosperity for all Canadians," said Finance Minister François-Philippe Champagne.

• on June 27, Trump announced that he was immediately suspending trade negotiations with Canada over the DST. He called the tax "egregious" and threatened Canada with new tariffs.
• Canada's new tax was to come into effect on June 30. It was set at 3% of digital revenues generated by companies earning more than $20 million in a calendar year from Canadian users. It applied to, among others, Amazon , Google, Meta and Apple, and was to apply to revenues earned from 2022.