Latest news with #DigitalServicesTaxAct
Calgary Herald
12 hours ago
- Business
- Calgary Herald
What is Canada's digital services tax and why is it infuriating Trump?
Article content U.S. President Donald Trump abruptly cut off all trade negotiations with Canada on Friday, citing Ottawa's Digital Services Tax (DST) for the decision. The tax, enacted last June, targets U.S. technology companies that operate in Canada but pay little tax here. Under the new tax regime, the first payments are set to be collected on Monday, June 30. The Financial Post breaks down what you need to know about the DST and why it is infuriating Trump and Americans. Article content Article content Article content Former Prime Minister Justin Trudeau's government enacted Canada's Digital Services Tax Act in June 2024, with the rules coming into effect the same month. The federal tax is applicable to large businesses — both foreign and domestic — that meet two specific criteria: a total global revenue of €750 million and up, and over $20 million of profits earned in Canada annually. The legislation levies a three per cent tax on digital services revenue over $20 million, and is retroactive to Jan. 1, 2022, meaning Ottawa could stand to gain billions in DST revenue, according to some estimates. Taxable revenue includes those of online marketplaces, digital advertising, social media, and user data — which will primarily affect American Big Tech giants such as Inc., Apple Inc., and Meta Platforms, Inc. Article content Article content Under the DST, companies were required to register with the Canada Revenue Agency (CRA) by Jan. 31, 2025 and are obligated to file their first DST returns on June 30, 2025. The CRA has said that more than 500 companies have already applied to register for DST purposes, and expects more than 100 companies to pay the tax. If applicable companies fail to register with the agency, they could be fined $20,000 per year. If they fail to file a DST return, Canada could dole out a penalty equal to five per cent of the unpaid tax for the year, plus one per cent of the unpaid tax for the year for each month, not exceeding 12 months, in which the return hasn't been filed. Article content According to the government, the goal of the DST is to ensure that major technology firms are taxed appropriately in the country. The legislation however, has come under fire from business groups on both sides of the border, with critics warning that the rules could further inflame Canada-U.S. ties. The Canadian Chamber of Commerce has argued that the tax could increase costs for consumers and risks 'damaging our beneficial and lucrative trade relationship with the U.S.' The U.S. meanwhile, has long denounced Canada's proposed rules, claiming that they unfairly discriminate against American firms. Last August, under the former Biden administration, the Office of the U.S. Trade Representative (USTR) launched dispute settlement consultations with Ottawa under the Canada-United States-Mexico Agreement over the DST. The U.S. has said that American companies are on the hook to pay Ottawa US$2 billion under the DST. 'Only America should be allowed to tax American firms,' Trump said in a February statement. Tech giant Google LLC responded to Canada's digital services tax rules by introducing an additional 2.5 per cent fee for ads shown in Canada starting in October 2024. Called the 'Canada DST Fee,' Google said the surcharges will 'cover part of the costs of complying with DST legislation in Canada.'
Hindustan Times
14 hours ago
- Business
- Hindustan Times
Donald Trump says terminating trade talks with Canada over digital services tax, warns of new tariff
United States President Donald Trump announced that he is terminating all trade discussions with Canada over the latter's Digital Services Tax on American tech companies, calling it 'direct and blatant attack' on the US. Canada's Digital Services Tax, which Trump called 'direct and blatant attack' on the US, is set to take effect from Monday.(File/AP) Calling Canada, US' neighbour, a 'very difficult country to deal with', Trump added that he plans to retaliate with another tariff on Canada which will be announced within the next seven days. In a post on TruthSocial on Friday, Trump wrote, '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.' 'They are obviously 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,' he added. "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. Thank you for your attention to this matter!' Canada's Digital Services Tax is set to take effect from Monday. What is Canada's 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. The digital services tax applies at a rate of 3% on revenue earned from 'certain digital services that rely on engagement, data, and content contributions of Canadian users' and 'certain sales or licensing of Canadian user data', according to the government of Canada. The tax will hit US tech giants such as Amazon, Google, Meta, Uber, and Airbnb and will levy a 3% tax on the money they make from Canadian users. The tax will be applied retroactively on revenues earned since January 1, 2022, meaning that the US companies will owe about $2 billion by the end of this month, reported AP.
