Canada introduced a 3% Digital Services Tax (DST) in June 2024. This tax targets large technology companies, including Amazon, Google, and Meta.
The DST applies to both foreign and domestic firms. These firms must have annual global revenues exceeding €750 million and Canadian digital services revenue over CA$20 million.
The tax is retroactive to January 1, 2022, with the first payments due by June 30, 2025.
The U.S. government opposes Canada's DST, claiming it unfairly targets American companies. President Donald Trump announced plans to impose tariffs on Canada in response.
The USTR requested consultations with Canada under the USMCA in August 2024. The USTR argues the DST violates USMCA provisions.
As of June 18, 2025, the DST remains in effect, with the first payments due by June 30, 2025. Ongoing discussions between Canada and the U.S. are underway to address trade tensions.
The DST could cost U.S. firms approximately $2.3 billion annually. This could lead to higher prices for Canadian consumers and affect the operations of U.S. companies in Canada.
The future of digital services taxation and international trade relations will likely be influenced by the outcome of the ongoing trade discussions and potential retaliatory measures.