United States President Donald Trump abruptly ended trade talks with Canada via his social media platform, Truth Social, due to Canada’s Digital Services Tax. The tax, active since last year with retroactive effect from January 1, 2022, will start affecting companies from June 30, 2025, notably impacting major US tech firms and e-commerce platforms.
The DST applies a 3% tax to revenue from specific digital services relying on user engagement, data, and content.
It focuses on firms with global revenues above €750 million and Canadian digital services sales over CAD 20 million.
While effective since January 1, 2022, payment starts only on June 30, 2025.
Canada justifies the DST by demanding a portion of profits from foreign companies benefiting from Canadian users. The tax aims to generate $875 million yearly, totaling CAD 7.2 billion over five years. The U.S. Trade Representative (USTR) views these taxes as discriminatory, suggesting retaliatory tariffs against nations imposing similar taxes.
The US Chamber of Commerce criticized the DST as “discriminatory” and contrary to global tax standards, arguing it breaches Canada’s commitments under the USMCA and WTO rules. Despite US objections, Canadian Finance Minister Francois-Philippe Champagne confirmed that Parliament approved the DST, signaling the government’s intention to move forward with its implementation.
France, Italy, Spain, and the United Kingdom already have tax regimes; the US is considering significant actions. Trump labels the move as a direct attack online. Large companies like Amazon, Apple, Airbnb, Google, Meta, and Uber will face a three percent tax on earnings from Canadian users.
Sources News From Various Digital Platforms, Websites, Journalists, And Agencies.
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