Canada rescinded the Digital Services Act after Donald Trump threatened to terminate trade talks on Friday.
US tech giants came close to paying billions to Canada under a new tax law.
Had Canada not halted a digital services tax enacted in 2024 that applies retroactively to 2022, US tech giants would have needed to pay Canada approximately $3 billion upfront on Monday, on top of a 3% levy on all revenue earned from digital services linked to Canadian users going forward.
The Computer & Communications Industry Association estimated that Canada’s tax measure would lead to annual losses of between $900 million and $2.3 billion for US firms and could result in up to 3,000 job losses in the country.
In a separate estimate by Canada’s Parliamentary Budget Officer in 2023, the DST would generate CA$7.2 billion in revenue for the government over five years, which is about $5.29 billion at the current exchange rate.
The digital services tax, which is a tax on companies that earn revenue in Canada through social media advertisements and other online services, was halted on Sunday after President Donald Trump announced on his social media on Friday that the US would be « terminating ALL discussions on Trade with Canada » over the measure.
