Newsroom

27 June 2025

Adopted on June 20, 2024, Canada’s Digital Services Tax Act (DST) is already making waves both domestically and internationally. It has even led to the suspension of trade negotiations between the United States and Canada.

At Boléro, we help you grasp the tangible impacts of this legislation—whether in terms of compliance, risk management, or strategic influence. We actively monitor developments to guide your decisions in a rapidly evolving global landscape.

What is the DST?

In effect since June 28, 2024, with retroactive application to January 1, 2022, the DST imposes a 3% tax on certain revenues generated in Canada by companies offering digital services.

These services notably include:

• Online advertising

• Marketplace platforms

• Social media networks

• The sale or licensing of Canadian user data

Who is affected?

The tax applies to companies that:

• Generate annual global revenues exceeding €750 million (OECD threshold)

• Earn more than CAD 20 million in digital services revenue in Canada

Major players such as Google, Meta, Amazon, and TikTok are directly targeted by this law.

How much revenue is expected?

The Government of Canada estimates that the DST could generate approximately CAD 7.2 billion in tax revenue between 2023 and 2027. Thanks to its retroactive nature, the law captures earnings from prior years.

Why was this law adopted?

The goal is clear: to ensure that digital giants pay taxes where they generate value, even in the absence of a physical presence. With this approach, Canada aligns itself with other jurisdictions while awaiting a coordinated multilateral solution under OECD-led negotiations.

A controversial move

The United States strongly opposes the tax, viewing it as unfairly targeting its tech companies. President Donald Trump condemned it as a “direct and blatant attack” on the U.S., stressing that it specifically targets American tech firms.

As a result, U.S. tech companies could face a retroactive bill of approximately USD 2 to 3 billion.

In response, the U.S. administration has suspended trade negotiations with Canada. This move signals a hardening of bilateral relations and may jeopardize other sensitive economic discussions between the two countries.

What now?

As tensions rise, businesses must adapt their strategic planning to include this new fiscal reality and prepare for potential consequences related to market access, tariffs, and regulatory stability. Closely monitoring international developments is now essential.

Questions about the DST or its potential impact on your business? Write to us.