Canada drops US tech tax to revive trade talks
What's the story
In a bid to revive stalled trade negotiations with the United States, Canada has decided to scrap its digital services tax. It was set to become operative on June 30. The Canadian government's decision comes after President Donald Trump had previously called off talks over the levy. Both nations have now agreed to resume discussions, with an aim to finalize a deal by July 21.
Tax details
Tax was unfairly burdening US tech firms: Trump
Canadian Finance Minister Francois-Philippe Champagne announced the repeal of the Digital Services Tax (DST) on Sunday. The tax had been a bone of contention between the two countries, with Trump accusing Canada of unfairly taxing US technology companies. The DST was set at 3% on digital services revenue. It targeted large tech platforms with revenues exceeding $810 million globally and over $20 million in Canadian-sourced revenue.
Trade goals
'Repealing DST will pave way for mutually beneficial trade arrangement'
"Rescinding the digital services tax will allow the negotiations of a new economic and security relationship with the United States to make vital progress," Champagne said. Canada and the US are negotiating relief from steep Trump tariffs, including 50% on steel and aluminum, 25% on autos, and a 10% import tax on most goods. Trump may raise rates after July 9, when his 90-day deadline ends. Canada and Mexico also face separate 25% duties tied to fentanyl-related trade measures.