Amazon has publicly “applauded” Canada’s decision to scrap its digital services tax, a move that effectively salvages ongoing trade talks with the United States. This tax, which was enacted last year, would have imposed a multibillion-dollar payment on US technology giants like Amazon by Monday, according to analysts. The reversal by Ottawa, which binned the tax on Sunday, comes after US President Donald Trump had sharply criticized the levy and called off trade negotiations, highlighting the significant leverage of major economies in global tax policy.
Canada Scraps Digital Services Tax
Canada has reversed course on its digital services tax (DST), a levy that would have seen major US technology giants, including Amazon, on the hook for a multibillion-dollar payment. This decision, announced on Sunday, effectively scraps the tax that was enacted last year. The move aims to salvage crucial trade talks with the United States, which had been jeopardized by the imposition of the DST.
Amazon Applauds Decision
An Amazon spokesman promptly stated that the company “applauds Canada’s decision to rescind the Canada Digital Services Tax Act.” Amazon has consistently argued that digital services taxes are discriminatory, stifle innovation, and ultimately harm consumers. The online retail giant expressed appreciation for the US government’s efforts to address such taxes globally, signaling a win for major tech firms operating across international borders.
US Pressure and Trade Talk Impact
The decision by Ottawa to scrap the tax comes after significant pressure from the United States. US President Donald Trump had openly slammed the digital services tax and, in response, called off trade talks with Canada. This diplomatic pressure proved effective, leading Canada to reverse its stance and eliminate the tax, demonstrating the powerful influence of trade negotiations on national fiscal policies.
The Financial Stakes of the DST
The digital services tax had been forecast to generate a substantial 5.9 billion Canadian dollars (approximately $4.2 billion USD) over a five-year period. This significant revenue projection underscores the financial implications of such levies for governments seeking to tax the profits of large multinational technology companies operating within their borders. The scrapping of the tax represents a considerable loss of projected revenue for Canada.
Global Trend of Tech Taxation
Despite Canada’s reversal, a growing number of countries worldwide have either imposed or are planning to impose special taxes on large technology firms. Nations such as Austria, Brazil, Britain, France, India, Italy, Spain, and Turkey are among a dozen large countries pursuing such measures. The primary goal behind these taxes is to compel tech giants to pay taxes in the jurisdictions where they conduct business, thereby countering common strategies used by these firms to reduce their global tax bills.
