Canada's Digital Services Tax (DST), implemented on June 28, 2024, continues to influence trade relations with the United States. The 3% tax applies to Canadian-source digital services revenue for large domestic and foreign taxpayers. It targets companies with global revenues exceeding €750 million and Canadian digital services revenue over CAD$20 million.
The DST is retroactive to January 1, 2022, with the first payment due by June 30, 2025. U.S. tech giants like Amazon, Google, and Meta have voiced concerns about increased costs and potential price hikes for Canadian consumers. The U.S. government has considered retaliatory tariffs on Canadian goods in response.
As of June 27, 2025, the DST remains in effect, with ongoing discussions between Canadian and U.S. officials to resolve trade tensions. Business groups have urged for the tax's pause or elimination. Auditors should monitor developments for potential impacts on cross-border operations and tax planning.