“`html
Canada is set to repeal a tax targeting major US technology firms, mere hours before the initial payments were due, in a move intended to facilitate the resumption of trade negotiations between the two nations.
The decision follows US President Donald Trump’s recent suspension of trade deal discussions, denouncing the tax as a “blatant attack” and threatening increased tariffs on Canadian imports.
In response, Canada has announced its intention to introduce legislation that will eliminate the tax and suspend the collection of payments, which were scheduled for Monday.
The proposed digital services tax (DST) would have levied a 3% charge on the Canadian revenue of US tech giants such as Amazon, Meta, Google, and Apple, for earnings exceeding $20 million.
Canada’s finance minister, François-Philippe Champagne, released a statement confirming the government’s commitment to rescinding the tax.
“The DST was initially announced in 2020 to address the concern that numerous large technology companies operating in Canada may not be adequately taxed on revenues generated from Canadian users,” the statement read.
“Canada has consistently favored a multilateral agreement concerning the taxation of digital services,” the statement added.
Many countries, including the United Kingdom, are currently revising their tax frameworks for large multinational technology corporations, which possess extensive global customer and advertiser bases but often face lower corporation tax bills due to their business structures.
Estimates suggest that Canada’s tax could have cost these tech giants over C$2 billion ($1.5 billion; £1.06 billion) in its inaugural year, as it was designed to be applied retroactively to January 2022.
Last year’s federal budget projected that the tax would generate a total of C$5.9 billion over the subsequent five years.
President Trump, who has cultivated close ties with tech company leaders during his second term, has actively opposed such taxes.
He characterized Canada’s policy as “egregious,” adding that “economically, we have substantial leverage over Canada.”
In a social media post on Monday, US Commerce Secretary Howard Lutnick expressed gratitude to Canada for removing the tax, stating that it would have “been a deal breaker for any trade deal with America.”
Approximately three-quarters of Canada’s goods exports are destined for the US, amounting to over $400 billion annually, while Canada accounts for only 17% of US production.
In a statement, the American Chamber of Commerce commended the decision to rescind the tax.
“This is a constructive decision that allows both countries to focus on strengthening their economic partnership,” stated chamber president Rick Tachuk.
Canada’s reversal follows a period of fluctuating relations between the US and Canada.
Shortly after assuming office, President Trump threatened to impose broad new tariffs and even suggested annexing the US’s northern neighbor.
This antagonism contributed to the resurgence of Canada’s Liberal Party, led by former central banker Mark Carney.
Subsequently, relations appeared to improve, with both Canada and the US expressing their intention to finalize new trade terms by July 21.
Canada’s digital services tax has been a longstanding point of contention for the US, dating back to the previous Biden administration.
Ottawa has received repeated warnings that the tax could undermine the trading relationship and trigger retaliatory measures.
However, earlier this month, Minister Champagne stated that Canada would proceed with collecting the scheduled payments from big tech companies, irrespective of ongoing discussions with the US.
“It is difficult to overstate the extent to which the government mismanaged the DST issue over the past five years,” wrote Michael Geist, a law professor at the University of Ottawa who has extensively analyzed the policy, in a recent blog post.
He cited, among other factors, the retroactive application of the tax and the downplaying of bipartisan concerns from US lawmakers.
There has also been opposition to the tax within Canada, with business groups cautioning that the associated costs will be passed on to consumers.
Senators are debating a nearly 1,000-page bill that is pivotal to President Donald Trump’s domestic agenda.
The suspect has been found dead after the firefighters were killed with a high-powered weapon, authorities say.
The 33-year-old also defends his democratic socialism, rejecting an accusation from Donald Trump that he is a communist.
The spending plan could also add nearly $3.3tn (£2.4tn) in debt, according to non-partisan analysis.
Senator Thom Tillis of North Carolina has refused to back the “Big Beautiful Bill”, saying it will be “devastating” to people in his state.
“`