Ottawa, June 2025 — In a major policy shift, Canada has announced it will no longer move forward with a controversial digital services tax that would have targeted big U.S. tech companies like Google, Amazon, Meta, and Apple.

The decision comes as part of Canada’s effort to ease tensions with the United States and preserve the broader trade relationship between the two countries. The proposed tax—originally set to apply retroactively from 2022—aimed to collect a 3% levy on revenues generated in Canada by foreign digital firms. It was widely criticized by U.S. officials and tech giants as discriminatory.

A Move to Protect Trade Relations

In a joint statement, Canada’s finance ministry confirmed the plan has been abandoned “in the interest of maintaining a stable and cooperative trade environment with the United States.” The digital tax had been viewed by many as a potential trigger for trade retaliation from Washington.

U.S. Trade Representative officials had warned that if implemented, the digital tax would lead to tariffs on Canadian exports, potentially sparking a trade dispute between the two allies. Canada’s reversal is seen as a step toward restoring goodwill in ongoing North American trade negotiations.

Global Tax Framework at the Core

Canada had previously defended the tax as a temporary solution while waiting for a broader global tax deal under negotiation by the OECD and G20 nations. That international framework aims to ensure large multinational companies pay taxes where they earn profits, not just where they are headquartered.

With delays in the global agreement, Canada had signaled frustration—but with this move, Ottawa has now reaffirmed its commitment to working through the international process instead of acting unilaterally.

What This Means for Tech and Trade

• Tech companies will avoid millions in potential back taxes from 2022 to 2024.
• Canada-U.S. trade tensions may cool down, especially ahead of upcoming trade agreement reviews.
• Global digital tax talks remain a key focus for the next year.