Canada to Refund Digital Services Tax After Law Change

The Canada Revenue Agency has confirmed that companies who paid the digital services tax will have to wait for new legislation to be passed in Ottawa before receiving their refunds. The tax, which was dropped by Prime Minister Mark Carney in a bid to restart trade negotiations with the United States, would have collectively cost American tech giants like Amazon, Google, Airbnb, Meta, and Uber about US$2 billion. The first payment was retroactive to 2022 and was due on Monday.

According to a CRA spokesperson, the agency collected some revenue from the tax before the reversal but did not specify the amount. Taxpayers will only receive their refunds once Parliament passes legislation formally revoking the tax. Members of Parliament are expected to return on Sept. 15 after a break.

Businesses were granted an extension on filing DST returns and making related payments ahead of the June 30 deadline. Carney mentioned that Canada and the U.S. are still aiming for a trade deal by July 21, following the restart of talks on Monday morning.

After the announcement to end the tax, the White House claimed that Canada had given in to pressure from Trump. Carney stated that this decision was part of a broader negotiation and would provide businesses with certainty.

Some companies faced confusion due to the sudden change, with payments not going through at the CRA. Businesses that had already made payments were uncertain about accounting for them in their upcoming quarterly statements.

According to the source: BNN Bloomberg.