The Canadian government has enacted a digital services tax (DST) through an Order in Council, following the passage of Bill C-59 by Canada's Parliament. This procedural move formally activates the DST, which had been law but not yet implemented. Companies are awaiting further details on retroactivity and compliance requirements.
In response, the Computer & Communications Industry Association (CCIA), along with ten other trade associations, urged the Biden Administration to take strong action against Canada's DST. A CCIA Research Center study indicated that the DST could result in up to $2.3 billion in annual losses for U.S. companies and potentially lead to thousands of job losses in the United States.
Jonathan McHale, CCIA Vice President of Digital Trade, stated: "Despite repeated calls for urgent action against Canada’s digital services tax, so far, we have yet to see a robust response from the U.S. government. This recent Order in Council should serve as the final straw for the United States, as the tax will siphon away revenue from U.S. services providers that would otherwise go towards the U.S. tax base."
McHale emphasized that while Canada's DST is now active, key implementation details remain unresolved, causing confusion and uncertainty among affected companies. He noted: "One thing is clear: this DST is no longer hypothetical—it is in force and requires swift response."
McHale also highlighted that the design of Canada's DST disproportionately impacts U.S. companies and threatens thousands of American jobs. He called for immediate action from USTR: "We have heard repeated assurances that USTR is reviewing the tools available to it—that review must now turn into action."
