Canada suspended the implementation of its proposed digital services tax on major technology companies on Monday to reopen stalled trade negotiations with the United States.
The tax, which was set to impose a 3% levy on revenue generated from Canadian users, would have affected companies including Amazon, Google, Meta, Uber, and Airbnb. Canadian officials announced the pause following U.S. President Donald Trump’s move to halt trade talks over disagreements related to the digital tax.
Canadian Finance Minister Chrystia Freeland confirmed the suspension, stating that Canada remains committed to a fair taxation framework for digital services but will delay action to support trade discussions.
“This pause allows us to work toward a collaborative and durable global solution,” Freeland said.
The tax was designed to apply to multinational digital service providers with global revenues over CAD 750 million and Canadian revenues exceeding CAD 20 million. It aimed to address gaps in the current tax system by targeting companies that generate significant profits in Canada without proportional taxation.
The United States had raised concerns that the tax could lead to retaliatory measures, warning it could disrupt economic relations and affect Canadian exports. By halting the tax, Canadian officials expressed hope that both countries can resolve their differences and restart bilateral trade talks.
The digital services tax had been part of Canada’s broader strategy to ensure multinational tech firms contribute to the Canadian economy. However, its potential impact on cross-border trade prompted criticism from U.S. officials and tech industry representatives.
Despite the suspension, Canadian authorities reaffirmed their support for international cooperation in creating a unified approach to digital taxation. They indicated a willingness to work with global partners to find a long-term solution.