Canada Caves to Trump on Tech Tax

The first payments from Canada’s digital services tax, which was enacted last year and applies retroactively to 2022, were initially set to be collected Monday. The tax would have applied to both domestic and foreign tech companies, including U.S. giants such as Amazon, Google and Meta with a 3% levy.

This decision from Ottawa was an about-turn from Canadian officials earlier this month, who said they would not pause the digital services tax, despite strong opposition from the U.S.

The digital services tax was first introduced in 2020 to address a taxation gap where many large tech companies were earning significant revenues from Canadians, but were not taxed.

Ottawa also said that the tax was enacted while it worked with international partners — including the U.S.— on a multilateral agreement that would replace national digital services taxes.

U.S. goods trade with Canada totaled roughly $762 billion last year, according to the Office of the U.S. Trade Representative.