Canada rescinds tax hitting US tech firms: government

[OTTAWA] Canada is rescinding taxes impacting US tech firms that had prompted Donald Trump to call off trade talks in retaliation, Ottawa said on Sunday, adding that negotiations with the US president would resume.

Canadian Finance Minister Francois-Philippe Champagne “announced today that Canada would rescind the Digital Services Tax (DST) in anticipation of a mutually beneficial comprehensive trade arrangement with the United States,” a government statement said.

It added that Trump and Canadian Prime Minister Mark Carney “have agreed that parties will resume negotiations with a view towards agreeing on a deal by July 21, 2025.”

There was no immediate comment from the White House or Trump.

The Republican president said Friday that he was ending trade talks between the North American neighbors over the tax, adding that Ottawa will learn of a new tariff rate on Canadian goods within a week.

The digital services tax was enacted last year and forecast to bring in C$5.9 billion (US$5.4 billion) over five years.

While the measure was not new, US service providers would have been “on the hook for a multi-billion dollar payment in Canada” come June 30, noted the Computer & Communications Industry Association recently.

The three per cent tax applies to large or multinational companies such as Alphabet, Amazon and Meta that provide digital services to Canadians, and Washington had previously requested dispute settlement talks over the matter.

Canada has been spared some of the sweeping duties Trump has imposed on other countries, but it faces a separate tariff regime.

Since returning to the White House in January, Trump has also imposed steep levies on imports of steel, aluminum and autos.

Canada is the largest supplier of foreign steel and aluminum to the United States. AFP