US Challenges Canada's Digital Services Tax

The United States has requested dispute settlement consultations with Canada over its new digital services tax (DST) on large multinational companies. U.S. Trade Representative Katherine Tai stated that the tax discriminates against U.S. companies and appears inconsistent with the USMCA trade agreement. The DST, enacted in June and retroactive to 2022, imposes a 3% levy on digital services revenue from companies like Alphabet, Amazon, and Meta. If the issue is not resolved within 75 days, the U.S. may request a dispute settlement panel, potentially leading to retaliatory tariffs. Canada argues that the tax is necessary due to stalled global tax reform negotiations and notes other G7 countries have similar taxes. The outcome of these consultations will be closely watched as it could significantly impact U.S.-Canada trade relations.