Canada cancels digital tax to secure deal with the U.S.
The Canadian government unexpectedly scrapped the digital services tax to accelerate trade talks with the U.S. The decision is part of a broader deal both countries aim to finalize by July 21.
Photo: Collision Conf, CC BY 2.0
The Canadian government has announced the cancellation of the Digital Services Tax, introduced in 2020 to tax revenues of major tech companies.
Finance Minister François-Philippe Champagne stated that the move is intended to facilitate negotiations with the United States on a new economic and defense agreement.
Prime Minister Mark Carney noted that talks will continue as long as necessary, but Canada hopes to sign the agreement by July 21.
This is the date set by G7 leaders at the summit in Kananaskis. According to Carney, repealing the tax is a strategic move to benefit Canadian workers and businesses.
The tax collection, scheduled for June 30, is now canceled, and a bill to formally repeal the DST will soon be introduced in Parliament.
Although Canada had previously advocated for a multilateral approach to taxing digital giants, the current priority is bilateral relations with Washington.
Former President Donald Trump had sharply criticized Canada’s move to impose a digital tax on American IT companies.
In a statement on social media, he called it a "direct and brazen attack" on the United States. He reminded that Ottawa had imposed 400% tariffs on American dairy products for years and described Canada as "a difficult trading partner."
Trump immediately canceled all trade negotiations with Canada and vowed to announce retaliatory tariffs within seven days, which he said Canada would have to pay for access to the U.S. market.
It was previously reported that G7 countries agreed not to impose a global minimum tax on U.S. corporations, while the U.S. pledged to drop punitive tariffs on its allies — part of a broader international compromise.