President Donald Trump suspended negotiations with Canada about this tax on Friday, which led to a weekend of intense discussions between Canadian ministers and their American counterparts.
Following a telephone call between Mr. Carney and Trump on Sunday, Ottawa announced that he was deleting the tax.
The White House economic advisor Kevin Hassett said on Monday that the United States would immediately resume commercial negotiations with Canada. A spokesperson for the Prime Minister’s office confirms the resumption of commercial negotiations.
Hassett made these comments during an interview on Fox News, saying that Trump had asked Canada to delete this tax at the G7 summit in Alberta earlier this month. According to him, the suppression of the tax means that Canada and the United States can resume negotiations.
The tax would have applied a 3 % levy on the revenues of Canadian users of large technological companies, including Amazon, Google, Meta, Uber and Airbnb.
Canada’s decision to abandon the tax came just when the first payment of the tax was about to have maturity. The first payment was retroactive at 2022 and could have cost US $ 2 billion collectively to American companies.
These payments were therefore suspended and the Minister of Finance, François-Philippe Champagne, soon provides for a legislative measure to repeal the law on digital services tax.
This last minute change caused some confusion among the companies that were paying the tax.
Tariq Nasir, partner at EY Canada and indirect tax specialist, stresses that some companies have given instructions to pay the tax, but that payments were not collected by the Canada Revenue Agency.
Companies that have made payments are now wondering how to recover this money and how to count payments in their quarterly states, which must be presented next month.
On Monday, business groups on both sides of the border congratulated the government of having taken measures to eliminate the tax, while criticism accused the government of capitulating before the United States.
The chief of the Bloc Québécois, Yves-François Blanchet, underlines that Mr. Carney campaigned during the elections on the need to find a way to escape Mr. Trump’s customs rights, but that he had not shown anything on this subject.
In a message published on social media, Mr. Blanchet adds that the government of Mr. Carney “made heavy compromise in defense, borders and counter-tale, then here it is backing on a consensual measure of culture protection, and always with nothing to show, no gain neither any progress for Quebec and Canada, nor on the prices, nor on trade.”
“It’s very worrying,” he concludes.
The interim leader of the new Democratic Party, Don Davies, claims on social media that the decision to end the digital service tax is to “give in to Trump and his billionaire friends”.
“Canada is a sovereign country that has the right to adopt its own tax laws. The abandonment of a fair taxation of technology giants is an unacceptable appeasement, ”explains Davies.
He adds that with Mr. Carney’s opening to the anti-missile defense plan “Golden Dome” of Mr. Trump and his race to reach the new 5 % threshold of NATO defense expenses, “it seems more and more that Mr. Carney had the elbows raised during the pre-match skating session-to drop them once the match started”.
The leader of the Conservative Party, Pierre Poilievre, underlines that Mr. Carney’s decision intervened only a few days after the Minister of Finance, Mr. Champagne, announced that the tax would be applied as planned.
“Subsequently, at the very last minute, the Prime Minister decided to cancel this tax,” wrote Mr. Poilievre in an online message.
He adds that in exchange for the elimination of the tax, Mr. Carney “should insist that the United States immediately cancels customs duties on wood. We must obtain gains for our workers as part of these negotiations. ”
Entrepreneur Arlene Dickinson, who is a member of the government’s advisory council on relations between Canada and the United States, affirms in an online message that it included the need for diplomacy and that only persons involved in negotiations had an overview of the situation.
Ms. Dickinson declared herself “disappointed to see the TSN (tax on digital services) put on break barely a few hours after having firmly supported it”.
“Reverse as quickly sends a message, whether we wanted it or not. And this message is important, ”she insists.
“It is important for Canadian companies that are in competition in a digital economy that is not always fair. It is important for taxpayers who support the burden when global actors do not. And he counts for those of us who believe that when Canada defends something, it is good. ”
However, the Canada Chamber of Commerce describes the decision to abandon the “sage” tax.
“This tax would have weighed on Canadian consumers, companies and investors in the form of higher costs and would have harmed our economy at a critical time,” said David Pierce, vice-president of government relations in the Chamber, in a statement.
He adds that the removal of the tax “brings us closer to a renewed and reliable commercial agreement” with the United States.
Rick Tachuk, president of the American Chamber of Commerce in Canada (Amcham Canada), said that the withdrawal of the tax was a welcome measure from the Canadian government.
“This is a constructive decision that allows the two countries to focus on strengthening their economic partnership. Companies on both sides of the border are counting on policies that promote certainty, collaboration and long-term growth, “he said in a press release.
Benjamin Bergen, president of the Canadian Innovators Council, who represents the Canadian Technological Sector, said in a press release that his organization supported the tax, but that the government’s decision to eliminate it is the right one.
According to him, the tax was a “tool necessary to ensure that the global giants of technology contribute to their fair share in Canada” and that it was “designed to put local businesses on an equal footing that operate in a rapidly evolving digital economy”.
“Official negotiations now being deadlocked, the cancellation of the TSN is a strategic measure which, as we hope, will help revive dialogue with the United States,” concludes Mr. Bergen.
