Last year, the Canadian government introduced a new digital services levy on American digital platforms, including Amazon, Netflix and Disney+.  The levy was due to begin today in Ottawa, however, over the weekend, US President Donald Trump announced that he was pulling out of trade talks with Canada, over this new digital levy.

The new levy would see American companies taxed 3% of their revenues above $20 million and was estimated to bring in a further $2 billion a year.  This money was being targeted towards funding local Canadian content, as streaming becomes a bigger threat to local film industries.

Many countries around the world are looking at doing similar systems, to encourage the major streaming services to fund local content, as it’s expected, that, without intervention, the amount of local shows and films would decline as the major American companies take more of the global TV market. 

Today, the Canadian government has rescinded its plans to introduce a digital service tax to allow trade talks with the United States to resume, to try to end the tariff war.   

Canada’s new government is engaged in complex negotiations on a new economic and security partnership with the United States, focused on getting the best deal for Canadian workers and businesses. Prime Minister Carney has been clear that Canada will take as long as necessary, but no longer, to achieve that deal.

To support those negotiations, the Minister of Finance and National Revenue, the Honourable François-Philippe Champagne, announced today that Canada would rescind the Digital Services Tax (DST) in anticipation of a mutually beneficial comprehensive trade arrangement with the United States. Consistent with this action, Prime Minister Carney and President Trump have agreed that parties will resume negotiations with a view towards agreeing on a deal by July 21, 2025.  

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. Canada’s preference has always been a multilateral agreement related to digital services taxation. While Canada was working with international partners, including the United States, on a multilateral agreement that would replace national digital services taxes, the DST was enacted to address the aforementioned taxation gap.

The June 30, 2025 collection will be halted, and Minister Champagne will soon bring forward legislation to rescind the Digital Services Tax Act.

Mark Carney,  Prime Minister of Canada, also said in a statement regarding the situation:

“In our negotiations on a new economic and security relationship between Canada and the United States, Canada’s new government will always be guided by the overall contribution of any possible agreement to the best interests of Canadian workers and businesses. 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.”

François-Philippe Champagne, who is the Minister of Finance and National Revenue, added:

“Canada’s new government is focused on building the strongest economy in the G7 and standing up for Canadian workers and businesses. 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.”

This backtracking from the Canadian government will likely not help other regions and countries, such as the European Union, which are also trying to implement similar systems, as the world adapts to major US companies getting a tighter grip on global television.

While this will no doubt look like Canada has backed off following Donald Trump’s threats, ultimately, the Canadian government is trying to look at the bigger picture to get the tariff war over.  Though, I wouldn’t be surprised to see an alternative system introduced, such as a quota system to get the major studios to make more content in Canada, rather than a direct levy, which is deemed as a tax.

What do you think of this situation?  Let me know on social media!

Roger Palmer

Roger has been a Disney fan since he was a kid and this interest has grown over the years. He has visited Disney Parks around the globe and has a vast collection of Disney movies and collectibles. He is the owner of What's On Disney Plus & DisKingdom. Email: Roger@WhatsOnDisneyPlus.com Twitter: Twitter.com/RogPalmerUK Facebook: Facebook.com/rogpalmeruk

View all posts