Writing. – Canadian Prime Minister Mark Carney announced that his government has decided to restart trade negotiations with
United States, after indefinitely suspending the entry into force of a digital tax that affected US technology companies such as Meta and Google.
The measure represents a key diplomatic shift amid trade tensions with Washington, especially after Donald Trump's return to the White House and his renewed protectionist policy towards USMCA partners.
"Within the framework of a new economic and security relationship with the United States, our government will always prioritize the interests of Canadian workers and businesses. The suspension of the tax responds to that commitment," Carney said in a statement issued by his office.
The digital tax will be repealed
According to the Canadian Department of Finance, the Digital Services Tax (DST), planned since 2022 but not yet applied, will be formally eliminated in anticipation of a "mutually beneficial" bilateral agreement with the United States.
This levy imposed 3% on revenues exceeding $20 million generated in Canada by digital services, and was designed to correct what Ottawa considered tax evasion by large digital platforms.
The Minister of Finance, François-Philippe Champagne, had reiterated days ago that the first collection of the DST was scheduled for this Monday, June 30, which heightened diplomatic tension, especially after criticism from President Trump, who considered the measure as retroactive, punitive and contrary to the spirit of free trade.
Trump pressured to stop the tax
Since his return to power, Trump has hardened his trade stance, accusing Canada and Mexico of maintaining unfair practices within the USMCA. In the Canadian case, the digital tax was seen as a direct affront to American companies, which led to the suspension of bilateral talks for weeks.
With the decision to withdraw DST, Ottawa now hopes to restart negotiations no later than July 21, 2025, a date agreed upon at the recent G7 Leaders' Summit held in Kananaskis, Alberta.
The Background: Pending Digital Taxation
The DST was originally proposed as a temporary solution while a multilateral agreement on digital taxation was reached within the OECD. However, progress in that negotiation has been slow, and Canada warned that, if a global solution is not achieved, it reserves the right to adopt unilateral measures in the future.
"We prefer an international solution, but we cannot allow companies with millions in profits to continue not contributing to the Canadian tax system," said Champagne.
Spanish
