Canada Scraps Digital Services Tax in Budget Implementation Bill

What Happened?

• On November 18–19, 2025, Finance Minister François-Philippe Champagne introduced Bill C-15, the Budget 2025 Implementation Act, which formally repeals the Digital Services Tax Act as part of a broader set of measures in the federal budget. The bill narrowly passed in the House of Commons earlier this week. [canada.ca], [parl.ca], [gtachronicle.com]

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Why Was the DST Repealed?

• The repeal follows months of trade tensions with the United States. The DST, which imposed a 3% levy on revenues from digital services provided to Canadian users, was strongly opposed by U.S. officials and tech giants.
• Canada agreed to rescind the tax to restart negotiations on a new economic and security partnership with the U.S., aiming for a deal by July 21, 2025. [canada.ca], [cbc.ca]

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Background on the DST

• Initially enacted in 2024, the DST applied retroactively to revenues earned since January 1, 2022, targeting large multinational corporations like Amazon, Meta, Google, Uber, and Airbnb.
• Companies meeting these thresholds were subject to the tax:
  • Global revenue ≥ €750 million
  • Canadian digital services revenue ≥ CAD 20 million
• The measure was projected to raise $7.2 billion over five years, but its retroactive nature and diplomatic fallout made it highly controversial. [torontotoday.ca], [millerthomson.com]

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Key Provisions in the Budget Bill

• Part 2 of Bill C-15 explicitly covers Digital Services Tax (Repeals and Other Measures), including transitional provisions and consequential amendments to related legislation. [parl.ca]
• Businesses that had prepared for the June 30, 2025 filing deadline will not need to file or pay DST, and refunds for any payments already made will be processed after the repeal legislation is enacted. [pwc.com]

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