Canada's prime minister Mark Carney has confirmed a U-turn on a digital services tax after Donald Trump accused the country of a 'blatant attack' on certain companies in the US.
Trump blasted Canada in a statement on Truth Social after leaders shared plans to collect payments on the digital services tax, which would be applied retroactively to 2022.
The tax would impact companies such as Amazon, Google, Meta, Uber and Airbnb by introducing a three percent levy on revenue from Canadian users, and the retroactive nature of the tax meant US companies would be left with a $2 billion bill, with the first payments due today (June 30).
Needless to say, Trump wasn't impressed with the notion and slammed Canada online, describing the tax as a 'direct and blatant attack on our Country'.
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"They are obviously copying the European Union, which has done the same thing, and is currently under discussion with us, also," Trump continued. "Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately."
In the wake of Trump's decision to end all trade talks, Carney confirmed that Canada would not move ahead with the tax 'in anticipation' of a trade deal that would be mutually beneficial for both the US and Canada.
The U-turn was announced on June 29, with the Department of Finance Canada saying in a statement: "The DST was announced in 2020 to address the fact that many large technology companies operating in Canada may not otherwise pay tax on revenues generated from Canadians.
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"Canada's preference has always been a multilateral agreement related to digital services taxation."
Commenting on the decision, Carney added: "Today’s announcement will support a resumption of negotiations toward the July 21, 2025, timeline set out at this month’s G7 Leaders’ Summit in Kananaskis."
While Francois-Philippe Champagne, Canada’s minister of finance and national revenue, said: “Rescinding the digital services tax will allow the negotiations of a new economic and security relationship with the United States to make vital progress and reinforce our work to create jobs and build prosperity for all Canadians.”
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Although Canadian leaders are keen to reach a deal with the US, the Finance Ministry stressed that the country would 'take as long as necessary' to achieve the deal.
The American Chamber of Commerce has now praised Canada's decision to rescind the tax, with chamber president Rick Tachuk saying: "This is a constructive decision that allows both countries to focus on strengthening their economic partnership."
Topics: Canada, Donald Trump, Mark Carney, Politics
Emily Brown