Canada’s Finance Minister François-Philippe Champagne confirmed that the government will move forward with the digital services tax (DST) targeting major technology companies, set to take effect on June 30. Despite growing calls from Canadian and U.S. business groups, as well as American lawmakers, to delay or cancel the tax amid ongoing trade negotiations with the United States, Ottawa remains committed to implementing the legislation passed by Parliament.
The DST imposes a 3% levy on revenues generated from Canadian users by large digital platforms such as Amazon, Google, Meta, Uber, and Airbnb. Notably, the tax is retroactive, covering income earned since January 1, 2022, which means U.S. companies face an estimated $2 billion USD bill due by the end of June. A letter signed by 21 members of the U.S. Congress highlighted that American firms would pay approximately 90% of the revenue Canada expects to collect from the tax.
Business groups, including the Canadian Chamber of Commerce and the American Chamber of Commerce in Canada, have warned that the DST could jeopardize ongoing trade talks and provoke retaliatory measures from the U.S., potentially affecting Canadian pension funds and investments. Rick Tachuk, president of the American Chamber of Commerce in Canada, described the tax as a “provocation” that risks undermining the trade agreement negotiations.
Finance Minister Champagne emphasized that Canada is not alone in facing such challenges, noting that discussions about digital taxation are ongoing at the global level among G7 nations. He reiterated that the DST legislation is firmly in place and will be enforced as scheduled.
The DST was first promised by the Liberal government during the 2019 election campaign but was delayed due to international efforts to establish a coordinated multinational digital tax framework. With global negotiations at the OECD stalling, Canada proceeded with its own tax, joining countries like France and the United Kingdom in implementing similar measures.
As the June 30 deadline approaches, Canada remains steadfast in applying the DST, underscoring its commitment to ensuring that large digital companies contribute their fair share of taxes on revenues generated from Canadian users.
