As the due date arrives, Canada has officially withdrawn its proposed Digital Services Tax (DST), removing a key obstacle in its tense trade relationship with the United States.
The tax, targeting revenue from global digital platforms like Amazon, Google, and Meta, was originally intended to ensure foreign tech giants contribute fairly to Canada’s economy. However, the policy faced fierce opposition from Washington, with the U.S. threatening retaliatory tariffs on Canadian exports.
Prime Minister Mark Carney announced the decision, stating:
In our negotiations on a new economic and security relationship between Canada and the United States, 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.
Finance Minister François-Philippe Champagne added that the move would accelerate economic cooperation, saying:
Rescinding the digital services tax will allow negotiations of a new economic and security relationship with the United States to make vital progress and reinforce our work to create jobs and build prosperity for all Canadians.
The DST, first proposed in 2021, aimed to impose a 3% tax on revenues generated by foreign digital services provided to Canadians. While intended to close tax loopholes, the policy risked escalating into a full-blown trade dispute.
Industry leaders welcomed the withdrawal, viewing it as a de-escalation measure that reduces uncertainty for businesses. The decision also aligns with international efforts, led by the OECD, to develop a global framework for digital taxation.
With this concession, trade negotiations between Canada and the U.S. are expected to resume in the coming weeks.
At the time of publishing, no public comments or press releases from major tech companies have been reported regarding this development.
