Canada abandons Digital Services Tax to advance trade negotiations with the US

The Canadian Ministry of Finance has announced the elimination of the digital services tax as part of an effort to restart trade negotiations with the United States. The decision was made amid preparations for a new round of bilateral dialogue, which aims to reach an updated trade agreement by July 21, 2025.

The digital services tax, which was intended to tax the income of international technology companies operating in the Canadian market, caused tension in relations with Washington. The rejection of its implementation was a signal of Ottawa's political flexibility and desire to remove obstacles to progress in economic negotiations.

Canadian Prime Minister Mark Carney stressed that the tax repeal is a constructive step that will help restore bilateral dialogue with the administration of President Donald Trump. According to him, eliminating the potential conflict over digital taxation opens up opportunities for developing a mutually beneficial tariff agreement and normalizing trade flows.

The digital tax was previously seen as a temporary measure amid global controversy over the taxation of multinational IT giants. However, in the context of the revival of the negotiation process with the United States, priority is given to strengthening strategic economic ties between the two largest trading partners.

The upcoming talks are expected to address a wide range of issues, including tariff barriers, access to digital markets, rules for cross-border data transmission, and modernization of trade regulation mechanisms. The administrations of the two countries plan to reach an agreed text of the agreement in the coming weeks.