The United States government says it will restart trade talks with Canada in light of the digital services tax being withdrawn over the weekend.
The tax, which was scheduled to take effect Monday, would have applied a three per cent levy on revenue earned from Canadian users by large digital companies.
That included firms such as Amazon, Google, Meta and Airbnb, with payments set to be retroactive to 2022.
The measure had drawn sharp criticism from President Donald Trump, who abruptly ended trade talks with Canada on Friday.
Trump called the tax a “direct and blatant attack” on U.S. technology firms and threatened new tariffs on Canadian goods.
In a statement late Sunday evening, Finance Minister François-Philippe Champagne said the Canadian government would introduce legislation to repeal the Digital Services Tax Act.
Champagne explained that the decision to rescind the tax will help move negotiations forward and support long-term economic growth.
“Canada’s new government is focused on building the strongest economy in the G7 and standing up for Canadian workers and businesses,” he said.
“Rescinding the digital services tax will allow the negotiations of a new economic and security relationship with the United States to make vital progress.”
The digital services tax was first introduced in 2020 to address concerns that large multinational tech companies were generating significant revenue from Canadian users without paying a fair share of tax in Canada.