Canada rescinds digital services tax to restart US trade talks
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The news: Canadian Prime Minister Mark Carney has rescinded his government's digital services tax, hours before it was due to come into effect, after US President Donald Trump halted trade negotiations because of it.
The context: Carney and Trump have agreed that the two governments will resume negotiations "with the view towards agreeing on a deal" by 21 July, according to a statement from the Canadian Department of Finance.
Canada’s Digital Services Tax would’ve started collecting money from tech companies on 30 June and would have applied retroactively to revenue dating back to 2022.
A 3% levy would've been placed on tech company revenue gleaned from providing digital services to Canadian users or sales of Canadian user data.
In a social media post on Saturday, Trump said "based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately".
The tax has frustrated big American tech companies like Amazon, Apple, Google and Meta as well as US government officials.
In Australia, the federal government remains committed to a ‘news bargaining incentive’, a proposed conditional levy on tech companies intended to make them negotiate deals to pay local media companies if news content is accessible on their platforms.
Assistant Treasurer Daniel Mulino told the Australian Financial Review on Thursday that the news bargaining incentive remains a “key priority”.
What they said: “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,” Canadian Prime Minister Mark Carney said.
“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.”
