Canada has rescinded its digital services tax in hopes to advance trade negotiations with the U.S., Canada’s finance ministry said in a statement on Sunday.
The announcement came following a phone call between Prime Minister Mark Carney and U.S. President Donald Trump, and just hours before the first payment under the tax was going to come due for major tech companies like Amazon and Google.
“Rescinding the DST will allow the negotiations to make vital progress and reinforce our work to create jobs and build prosperity for all Canadians,” said Minister of Finance François-Philippe Champagne, in a social media post.
Carney and Trump have agreed that their teams will resume negotiations with a view towards agreeing on a deal by July 21, 2025, the ministry said in their 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,” Carney said in a written statement on Sunday.
He also said Canada’s negotiations with the U.S. “will always be guided by the overall contribution of any possible agreement to the best interests of Canadian workers and businesses.
The digital services tax would have required technology companies such as Meta, Amazon, Meta, Google, Airbnb, and Uber to pay a tax on revenue earned from engaging with online users in Canada.
The tax was first promised by the Liberals in 2019 under then-prime minister Justin Trudeau. They included it in the fall economic statement a year later, but it didn’t become law until 2024.
The first payment on Monday was to be retroactive for three years, and was estimated to likely be close to $2 billion. The Parliamentary Budget Officer has previously estimated Canada would raise about $7.2 billion under the tax over five years.