To “support” its negotiations with the United States, Canada cancels the digital services tax (TSN). De facto, the negotiations between the two countries are resumed, announced the Ministry of Finance on Sunday, at the end of the evening.
TSN payments of June 30, 2025 are therefore suspended. “Our new government is negotiating a new economic and security partnership with the United States,” the Minister of Finance and National Income said François-Philippe Champagne.
“Withdraw the digital services tax will advance discussions and support our efforts to create jobs and build prosperity,” he added.
The abolition of the tax “will help resume negotiations to respect the period of July 21, 2025 agreed earlier this month at the G7 leaders’ summit in Kananaskis,” said Prime Minister Mark Carney, in a statement released on Sunday evening.
When the new Government of Canada participates in negotiations on a new economic and security partnership between Canada and the United States, it is always guided by the general rebate of any agreement for workers and businesses in Canada.
Extract from a press release from the Prime Minister of Canada, Mark Carney
In the G7, US President Donald Trump and Mark Carney gave themselves a month to conclude an agreement on trade and security. Ottawa hopes that this agreement leads to the lifting of customs duties imposed by the Trump administration to a multitude of products, including those of steel and aluminum, which are surcharged up to 50 %.
Friday, Donald Trump suddenly ended the talks between the two countries, adding that the TSN imposed on the web giants was the main obstacle to negotiations. This tax measure constituted a “direct and flagrant attack against [son] country ”, he railed.
“Economically, we have such power over Canada. I would prefer not to use it, but they did something with our technological companies, “said President Trump, indicating that new customs duties would be imposed in Canada this week.
TSN cancellation is an important voltage for Canada. On Thursday, Minister Champagne assured that the tax would be maintained, despite the pressure that intensified on his government as to its cancellation.
American reluctance
TSN was announced in 2020 to force large American technological companies to pay income tax generated in Canada. They are exempt from doing so at present. This tax was adopted on a temporary basis, awaiting the development of an international multilateral agreement which would replace it.
As the tax applied retroactively, American companies – of which, for example, Amazon, Google and Meta – should have paid US 2 billion in Canada at the end of the month, or 3 % of their income from Canadian users.
European countries, such as Austria, France and the United Kingdom, have a similar tax measure. British Prime Minister Keir Starmer has managed to protect this tax, by concluding an agreement with Donald Trump at the G7 top in Alberta.
At the beginning of June, 21 members of the US Congress notified Donald Trump that the TSN would result in major loss of income for the United States, when it was applied.
This tax also raises its share of dissatisfaction in Canada. The Canadian Business Council notably requested its suspension. “Canada is expected to present an immediate proposal to eliminate TSN in exchange for the elimination of customs duties from the United States,” wished the group’s president and chief executive officer, Goldy Hyder, before the TSN was canceled.
The CEO of Quebecor, Pierre Karl Péladeau, is also refractory. Even if she is Canadian, her business, since she offers digital services and generates annual income over $ 20 million, is targeted by the TSN.
« [Nos économies] Unfortunately have been counterbalanced, largely, by the application of the new 3 % federal tax on digital services, “he commented on the announcement of Québecor’s quarterly results in November 2024.
With the collaboration of Fannie Arcand, The press, and the Canadian press
