Canada caves to win and cancel its digital service tax on major technologies

Canada fell back in its battle with US President Donald Trump on prices by canceling his proposed digital services (DST) on large technological companies, the government announcement. Trump Friday has ended commercial negotiations Above the sample, which he called “a direct and obvious attack against our country”. However, discussions having resumed Now that the DST has left, according to Canadian Prime Minister Mark Carney.

The DST has been in force since last year, but Canada had to receive the first payments totaling approximately $ 2 billion on June 30. However, these will now be interrupted. “To support these negotiations, the Minister of Finance … announced today that Canada would cancel the digital services tax (DST) in anticipation of a complete commercial arrangement with the United States,” the Ministry of Finance wrote yesterday.

With the DST, Canada foreseen To apply a three percent tax on the content of large technological companies that were counting on the commitment of Canadian users. The justification was that 70% of advertising revenue expenses in the country (around 25 billion dollars this year) go to American companies like Google and Meta, but these companies do not pay corporate taxes in Canada. Some funds collected under the DST would have been channeled on media companies injured by the advertising domination of Google and Meta.

The levy opposed not only to the United States government in the administrations of Biden and Trump, but also companies in Canada. Local companies feared that this increases their costs after Google, for one, said it would increase ads at least 2.5% in Canada to cover the cost of the DST.

Capitulation is a big victory for Trump and a windfall for his benefactors from the Technology Company. However, Canada was hammered by prices of 25% of Trump up to billions on metals, minerals and other goods, so the government of Carney probably considered it necessary to sacrifice the DST.