Canada drops digital services tax to help restart US trade talks
Canada has removed a tax on large American technological companies, just a few hours before its entry into force, to allow commercial talks between the two countries to restart.
On Friday, US President Donald Trump canceled negotiations on a trade agreement, describing the tax as a “blatant attack” and threatened higher prices on Canada imports.
In response, Canada said it was deleting the tax, which should have come into force on Monday.
The digital services tax (DST) would have noted that American technology giants, including Amazon, Meta, Google and Apple, are faced with 3% costs on Canadian revenues above $ 20 million.
The Minister of Finance of Canada François-Philippe Champagne published a declaration indicating that the tax would be canceled.
“The DST was announced in 2020 to face the fact that many major technological companies operating in Canada cannot pay a tax on income generated by Canadians,” he said.
“Canada’s preference has always been a multilateral agreement linked to the taxation of digital services,” added the press release.
Many countries, including the United Kingdom, change the way they tax large multinational technology companies, which have millions of customers and advertisers worldwide, but high tax bills because of how their activities are structured.
It is estimated that Canada’s tax would cost technology giants more than $ 2 billion per year in total.
Trump, who established a close relationship with owners of technology companies during his second term, pushed these taxes.
He described Canada’s policy as “blatant” by adding “economically, we have such power over Canada”.
The three quarters of goods exports from Canada go to the United States, worth more than $ 400 billion a year, while Canada only takes 17% of American production.
The ascent of Canada comes after a few roller coaster mountains for a few months for American-Canadian relations.
Shortly after taking office, Trump threatened to impose new radical prices and even annex the northern United States.
Antagonism has helped to propel the Liberal Party of Canada, led by the former central banker, Mark Carney, in power.
Since then, there seemed to be a rapprochement, Canada and the United States saying that it was aimed at agreeing with new commercial terms by July 21.
