Canada will rescind a tax on big US technology firms, just hours before first payments were due, to allow trade talks between the two countries to restart.
On Friday, US President Donald Trump called off negotiations over a trade deal, describing the tax as a “blatant attack”, and threatened higher tariffs on imports from Canada.
In response, Canada has said it will introduce legislation to remove the tax and would halt the collection of payments, which were due on Monday.
The digital services tax (DST) would have meant US tech giants including Amazon, Meta, Google and Apple, facing a 3% charge on Canadian revenue above $20m. Canada’s finance minister, François-Philippe Champagne, issued a statement saying the tax would be rescinded.
“The DST was announced in 2020 to address the fact that many large technology companies operating in Canada may not otherwise pay tax on revenues generated from Canadians,” it said.
“Canada’s preference has always been a multilateral agreement related to digital services taxation,” the statement added.
Many countries, including the UK, are changing how they tax large multinational technology firms, which have millions of customers and advertisers around the world, but high corporation tax bills due to the way their businesses are structured.
It was estimated that Canada’s tax would cost the tech giants more than C$2bn in its first year as the tax was being applied retroactively to January 2022.
Last year’s federal budget estimated the tax would bring in C$5.9bn in total over the next five years.
Trump, who has forged a close relationship with tech company owners in his second term in office, has pushed back against such taxes.
Credit: bbc.com
