What is Canada's Digital Services Tax threatening American tech companies
President Donald Trump on Friday said he is immediately suspending all trade talks with Canada over its Digital Services Tax policy that will hit American tech companies. In a post on Truth Social, the 78-year-old said that Ottawa had informed his administration that the tax will take effect on Monday. Canada's Digital Services tax is expected to hit Apple among other tech companies(Unsplash)
'We have just been informed that Canada, a very difficult Country to TRADE with, including the fact that they have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products, has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country,' Trump said in his post.
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He further accused Canada of 'copying the European Union, which has done the same thing, and is currently under discussion with us, also'.
'Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately. We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven-day period." What is Digital Services Tax?
Canada's Digital Services Tax (DST) is a 3% tax on revenue from specific digital services provided to Canadian users, enacted through the Digital Services Tax Act, which received royal assent on June 20, 2024, and took effect on June 28, 2024.
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It targets large businesses with global revenue of €750 million (~US$801 million) and Canadian digital services revenue exceeding C$20 million (~US$14.8 million) annually.
The tax applies retroactively to revenues earned since January 1, 2022, with the first payment due by June 30, 2025. It covers four revenue categories: online marketplace services, online advertising (e.g., Google), social media services, and sales or licensing of Canadian user data.
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