Canada has rescinded its digital services tax in a bid to advance trade negotiations with the United States, days after President Donald Trump called off talks in retaliation for the levy.
Canadian Prime Minister Mark Carney, in a statement on Sunday, said he and Trump have now agreed to resume trade negotiations.
“Today’s announcement will support a resumption of negotiations toward the July 21, 2025, timeline set out at this month’s G7 Leaders’ Summit in Kananaskis,” Carney said.
The Canadian levy on technology firms had been set to go into effect on Monday.
Trump said on Friday that the tax, targeting “our American Technology Companies” was “a direct and blatant attack on our Country”.
The US is home to some of the world’s biggest technology companies, including Apple, Alphabet/Google, Amazon and Meta.
Canada’s Digital Services Tax Act (DSTA) introduces a levy on tech revenues generated from Canadian users – even if providers do not have a physical presence in the country.
It compels large technology firms with global revenues exceeding $820m and Canadian revenues of more than $14.7m to pay a 3 percent levy on certain digital services revenues earned in Canada.
Unlike traditional corporate taxes based on profits, this tax targets gross revenue linked to Canadian user engagement.
Digital services the levy will apply to include online marketplaces, social media platforms, digital advertising and the sale or licensing of user data.
One of the most contentious parts of the new framework for businesses is its retroactive nature, which demands payments on revenues dating back to January 1, 2022.
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