In Last-Minute Move, Canada Rescinds Digital Services Tax, Restarts Negotiations

'Canada and the United States have resumed trade negotiations,' reports Newsweek, 'after Canadian Prime Minister Mark Carney agreed to rescind the country's digital services tax on U.S. technology companies.'

The development follows President Donald Trump's announcement on Friday that he was suspending all trade talks with Canada 'effective immediately' over the tax policy... Canada's quick reversal signals the high stakes involved in maintaining trade relationships with the United States, particularly given the countries' deeply integrated economies.

Carney's office confirmed on Sunday that both leaders have agreed to restart negotiations after Canada committed to abandoning the 3 percent levy targeting major U.S. tech giants including Amazon, Google, Meta, Uber, and Airbnb. The tax was scheduled to take effect Monday and would have applied retroactively, creating an estimated $2 billion bill for American companies. The conflict escalated rapidly after Canada's Finance Department confirmed Friday that companies would still be required to make their first digital tax payments Monday, despite ongoing negotiations. The tax targeted revenue generated from Canadian users rather than corporate profits, making it particularly burdensome for technology companies operating internationally...
Canada's decision to rescind the tax came 'in anticipation' of reaching a broader trade agreement, according to government officials. With negotiations resuming, both countries will likely focus on addressing broader trade issues beyond the digital services tax.

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