Digital Services Tax axed to ‘advance’ trade talks with U.S: Finance Dep’t

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The federal government’s Digital Services Tax has been rescinded to “advance broader trade negotiations” with the United States, the Finance Department announced late Sunday night.

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The decision was made “in anticipation of a mutually beneficial comprehensive trade arrangement” with the U.S., a news release said, in the hope that the two countries can come to a deal by July 21 with Prime Minister Mark Carney and U.S. President Donald Trump agreeing to resume negotiations “consistent with this action.”

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There was no immediate reply to an email from the Toronto Sun asking if Carney or Finance Minister Francois-Philippe Champagne planned to address the media Monday on the developments.

“In our negotiations on a new economic and security relationship between Canada and the United States, Canada’s new government will always be guided by the overall contribution of any possible agreement to the best interests of Canadian workers and businesses,” Carney said in the statement. “Today’s announcement will support a resumption of negotiations toward the July 21, 2025, timeline set out at this month’s G7 Leaders’ Summit in Kananaskis.”

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The DST, the government said, was announced in 2020 to address large technology companies operating in Canada that “may not otherwise pay tax on revenues generated from Canadians.”

However, it was a source of irritation south of the border with Trump calling off trade and tariff talks with Canada on Friday, describing the tax as a “direct and blatant attack” on his country.

The statement said the anticipated Monday collection of the DST will be halted with Champagne expected to soon bring forward legislation to rescind the Digital Services Tax Act.

“Canada’s new government is focused on building the strongest economy in the G7 and standing up for Canadian workers and businesses,” Champagne said. “Rescinding the Digital Services Tax will allow the negotiations of a new economic and security relationship with the United States to make vital progress and reinforce our work to create jobs and build prosperity for all Canadians.”

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