Canada has rowed back on plans to introduce a digital services tax targeting US technology firms just hours before it was due to take effect, the country’s finance ministry has announced. The move appears to be part of a bid to advance trade negotiations with its neighbouring country, which are set to resume between Canadian […]
Canada has rowed back on plans to introduce a digital services tax targeting US technology firms just hours before it was due to take effect, the country’s finance ministry has announced.
The move appears to be part of a bid to advance trade negotiations with its neighbouring country, which are set to resume between Canadian Prime Minister Mark Carney and US President Donald Trump, with an agreement expected by July 21.
On Friday, Trump abruptly called off trade talks over the tax, claiming it to be a “blatant attack on our country.”
Trump reiterated his comments on Sunday, stating he would set a new tariff rate on Canadian goods within the next week.
With this, the Canadian government said in a statement that it was stepping back from the tax to help bring the countries back to the table.
“Prime Minister Carney and President Trump have agreed that parties will resume negotiations,” it said in a statement.
The tax would see tech firms pay 3% of the digital services revenue earned from Canadian users above $20m in a calendar year, and payments would have been retroactive to 2022.
The tax payments, charged to online companies, were to be due on Monday, 30 June, and would have cost US tech companies such as Alphabet, Amazon, and Meta an estimated $3bn.
“Canada’s new government will always be guided by the overall contribution of any possible agreement to the best interests of Canadian workers and businesses,” Carney said, adding that the move would “support a resumption of negotiations.”
“Rescinding the digital services tax will allow the negotiations of a new economic and security relationship with the United States to make vital progress,” added François-Philippe Champagne, the Canadian minister of finance.
