This upcoming June 30 marks the deadline for companies to pay Canada’s digital services tax (DST), a norm-busting tax that threatens the growth and success of U.S. companies and undermines long-standing global tax practices. As the first payment deadline looms, the United States should take prompt and decisive action to oppose Canada’s collection and secure its withdrawal before further proliferation of similar measures takes hold.
DSTs diverge from international tax and trade principles and contribute to destabilization and fragmentation in the international tax system, which is why 91pro视频 has consistently advocated for their removal. Like other DSTs, the Canada DST is an uncoordinated tax on gross revenues instead of net profits, which does not consider the costs of operating the business, hurting all companies but particularly lower-margin and loss-making companies. The tax targets globally successful companies by employing a global revenue threshold and relying on a narrow scope of digital activities that disproportionately affects the digital activities of successful U.S. firms, like digital advertising, while largely excluding Canadian competitors from liability.
Further exacerbating the uncertainty and compliance challenges is the Canadian government’s retroactive imposition of the tax back to January 1, 2022. Despite the Canadian government’s entering the DST into force as of June 28, 2024, the first payment covers tax accrued from January 1, 2022 through December 31, 2024 – three full years. Canada’s Office of the Parliamentary Budget Officer has estimated that companies will pay nearly $1.8 billion (CAD 2.468 billion) for the first DST payment.
The Trump administration has been clear in its opposition to DSTs and has consistently highlighted industry’s shared concerns with unilateral taxes that target U.S. companies and attempt to ring-fence the digital economy. The administration called out the Canada DST in a February 2025 presidential memo that, among other actions, directed USTR to determine whether to initiate a Section 301 investigation and/or pursue a panel under United States-Mexico-Canada Agreement (USMCA), given the DST’s inconsistency with Canada’s commitments under that landmark agreement. USTR has also continued to feature the Canada DST and similar problematic measures in its annual National Trade Estimate (NTE) Report, most recently published in March 2025.
Relatedly, the Section 301 investigations into DSTs adopted by France, Austria, Italy, Spain, Turkey, and the United Kingdom remain active and have generally played a crucial role in stemming further proliferation and expansion of DSTs and other problematic unilateral measures in recent years. Notably, the Canadian government chose to advance its DST after USTR had already determined during the first Trump Administration that similar measures adopted by France and other governments discriminate against U.S. companies. The failure of the Trump Administration to stand up for U.S. companies at this time would effectively signal to other governments that they are free to pursue their own versions, leading to further proliferation of these harmful measures.
Industry calls on the Trump Administration to affirm its opposition to DSTs by acting to oppose Canada’s collection of the DST and ultimately secure its withdrawal. Time is of the essence to push back against a tax that targets U.S. companies and undermines predictability and stability in the international tax system.