Canada has abolished the digital services tax targeting American tech companies in an attempt to ease trade negotiations with its neighbor after US President Donald Trump called the levy a "direct attack," UNN reports with reference to the Financial Times.
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The decision to abolish the tax, a 3% levy on services provided by large tech companies in Canada, was made hours before the tax was due to come into effect on June 30.
"Abolishing the digital services tax will allow negotiations on a new economic and secure relationship with the US to make vital progress and strengthen our work to create jobs and ensure prosperity for all Canadians," Canadian Finance Minister François-Philippe Champagne said in a statement on Sunday evening.
Canadian Prime Minister Mark Carney said that the tax reduction "will support the resumption of negotiations on schedule for July 21" for the conclusion of a trade agreement that was announced at this month's G7 leaders' summit in Kananaskis.
The statement says that Carney and Trump agreed on the resumption of negotiations with the aim of concluding an agreement.
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On Friday, Trump said that the US was "halting" trade talks with Canada in response to the tech tax, rekindling a fierce North American trade war after months of détente. Trump reiterated these complaints on Sunday.
US trade talks with Canada will be suspended until they cancel certain taxes - Trump29.06.25, 19:20
The tax, first announced in 2020, targeted companies such as Meta, Netflix, and Amazon, as well as local businesses. Those affected were required to file a declaration by the end of June or face a penalty. In December 2023, Canada's Parliamentary Budget Officer estimated that the DST tax would increase federal government revenues by CAD 7.2 billion ($5.3 billion) over five years.