Canada and the U.S. are back at the table for trade talks following Canada’s recent decision to repeal the Digital Services Tax (DST) — a move that business groups, including the Canadian Chamber network, have long called for.

The DST was widely viewed as a counterproductive tax that would have fallen on Canadian consumers and businesses, while simultaneously provoking trade tensions with our largest trading partner. That’s exactly what happened — it triggered threats of tariffs and a breakdown in negotiations before cooler heads prevailed and the tax was pulled.

The Canadian Chamber of Commerce has opposed the DST from the beginning, warning that it would hurt our economy, undermine investor confidence, and invite retaliation from the US.  Ending it now helps clear a path to what we hope will be a stable, renewed trade agreement, which is vital to Canadian businesses and the $3.6 billion in daily trade with the US.  The Langley Chamber regularly advocates through the Canadian Chamber for strong trade policies that resolve the ongoing dispute with the US and ensures Langley businesses continued access to US markets and US inputs. 

What is the DST?

The Digital Services Tax (DST) was a proposed tax by the Government of Canada aimed at large foreign (mostly U.S.-based) tech companies that earn revenue from digital services used by Canadians, such as online marketplaces (e.g., Amazon, eBay), social media platforms, digital advertising, and user data collection and sales.  The tax was designed to apply a 3% levy on certain revenues earned by these companies from Canadian users, regardless of whether the company had a physical presence in Canada.  It was seen as a stop-gap tax while a broader global tax framework was negotiated.  Concerns from the Chamber include the tax being passed on to consumers and businesses through higher costs, and the risk for it to upend trade talks and lead to retaliation.  

Canadian Chamber Comment:

"The Canadian Chamber of Commerce commends the Government of Canada for eliminating Canada’s Digital Services Tax (DST), while at the same time helping to secure the end of Section 899, the so-called U.S. “revenge tax.” Both measures were counterproductive for business and trade negotiations.  As the Canadian Chamber of Commerce has argued since the beginning, the decision to eliminate the DST makes sense. This tax would have fallen on Canadian consumers, businesses, and investors in the form of higher costs and hurt our economy at a critical time. And removing it moves us one step closer to a renewed, reliable trade deal with the U.S. Administration that will help to secure and grow the already incredible $3.6 billion of trade a day between our countries.  In the midst of complex, live negotiations, credit is due to Canada’s team, including Prime Minister Carney, Minister Champagne, Minister LeBlanc, and Ambassador Hillman among so many others, for their leadership at a pivotal moment for our country. Both sides must pave the road ahead with goodwill and incremental progress. The promise of a competitive, strong North American economic alliance is worth fighting for, and Canadian businesses are ready to do their part." - David Pierce, Vice President of Government Relations, Canadian Chamber of Commerce