Washington – The Canadian government formally withdrew its digital services tax (DST) with the passage of its budget bill, which rescinds the DST and commits to refunding all payees with interest. The tax, first announced in 2020, had been paused in June 2025 just days before in-scope companies were due to submit initial payments.
The Computer & Communications Industry Association has consistently opposed DSTs, including Canada’s, on the grounds that they are discriminatory, inconsistent with established international tax norms, and burdensome for U.S. commerce. Research from CCIA’s Research Center found that Canada’s measure risked imposing up to $2.3 billion in annual direct losses on U.S. companies and could have resulted in thousands of full-time U.S. job losses. Comparable DSTs in Europe have been estimated to collect more than $9 billion between 2020 and 2024, with the vast majority of those costs falling on U.S. firms. Canada’s action is particularly relevant given the continued (and proposed expanded) DSTs that are still in force or under active consideration.
The following can be attributed to Jonathan McHale, CCIA Vice President for Digital Trade:
“Canada’s formal withdrawal of its digital services tax and commitment to refund all payments is a welcome development. This reflects the sustained efforts of negotiators in both countries who worked diligently to resolve this issue, including officials from USTR, Treasury, and the White House who consistently pressed for a resolution. Other countries with enacted or proposed digital services taxes, including the UK, France, Spain, Italy, Austria, Belgium, and Poland, should take note of Canada’s action and commit to abandoning such discriminatory and harmful policies.”
