In a recent development, Canada and the United States have reached an agreement that will lead to Canada rescinding its Digital Services Tax (DST), which primarily targeted U.S. tech companies. This decision was announced just before these companies would have been required to pay approximately $2.7 billion in retroactive taxes by June 30.
The Computer & Communications Industry Association (CCIA) has reported that DSTs imposed by countries such as the U.K., France, Spain, and Italy have cost U.S. companies over $9 billion from 2020 to 2024. In February, former President Trump signed an executive order for the U.S. Trade Representative to consider resuming investigations into these taxes.
CCIA played a role in providing cost calculations of Canada's DSTs to the White House prior to President Trump's announcement, which led to negotiations that ended these taxes.
Matt Schruers, CCIA President & CEO, stated: “Digital services taxes break long-standing tax norms and violate trade commitments. We are encouraged by the Administration’s response and the decisions of countries including India, Canada, and New Zealand, to abandon existing and proposed DSTs. CCIA research has demonstrated the impact of these foreign taxes on the U.S. tax base. We urge U.S. policymakers to use the tools at their disposal to discourage discriminatory taxes that are gerrymandered around extracting funds from U.S. businesses.”