First payments for the DST were due on June 30, one day after Mr. Carney announced its cancellation.Jeff Chiu/The Associated Press
Google GOOG-Q has stopped charging a fee it put in place last year to cover the cost of Canada’s now-cancelled digital services tax, saying it will issue refunds to advertisers who were charged under the law.
The U.S. tech giant made the announcement Friday, after previously declining to comment on its plans to pause or cancel the 2.5-per-cent surcharge that it put in place in October, 2024, in anticipation of having to pay the levy.
“We are no longer charging a DST Fee on ads served in Canada and will refund any previously collected fees once the legislation has been officially repealed,” spokesperson Shay Purdy said in a written statement.
The announcement comes nearly three weeks after Prime Minister Mark Carney said he was cancelling the tax, after threats from U.S. President Donald Trump to walk away from trade talks and impose retaliatory tariffs over the levy.
Collectively, the 3-per-cent DST, which was retroactive to 2022, would have cost U.S. companies such as Amazon.com Inc., Google parent Alphabet Inc., Airbnb Inc., Meta Platforms Inc. and Uber Technologies Inc. about US$2-billion. It applied to their revenues collected via online marketplaces, social-media platforms, the sale and licensing of user data, and online ads.
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First payments for the DST were due on June 30, one day after Mr. Carney announced its cancellation. Mr. Purdy said Google’s surcharge had been removed as of July 1 and this would be reflected in invoices for the month. Refunds will have to wait until the federal government officially rescinds its Digital Services Tax Act, he added. This likely won’t happen until the fall when Parliament resumes.
Amazon.com Inc. AMZN-Q, which implemented a 3-per-cent digital service fee for ads served and purchased in Canada on the same day as Google last year, has yet to make any changes.
“While the Canadian Government announced it would rescind its digital services tax, it has yet to do so. As we await the government to fulfill its commitment, our billing and operations in Canada will continue as normal,” Amazon spokesperson Julia Lawless said in a written statement.
Sonia Carreno, president of the industry trade group Interactive Advertising Bureau of Canada, said she’s encouraged to see platforms such as Google take action after the government’s commitment to rescind the levy.
“This tax caused significant administrative disruption across the online advertising sector, and it’s evident that impacted platforms are now beginning the complex task of reversing pass-through costs and as a first step, ceasing collection,” Ms. Carreno said, adding that legislation will still be necessary to reassure affected companies that the DST won’t resurface.
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Since its introduction, the levy was heavily contested, both from companies it applied to and industry associations representing small businesses who argued entrepreneurs and consumers would bear the brunt of its cost.
Jasmin Guénette, vice-president of national affairs for the Canadian Federation of Independent Business, said the price of everything from taxes to rent to insurance has increased for small businesses and the ability to advertise on large online platforms is key in generating the revenues they need to stay afloat.
That’s why any saving, including a surcharge on advertising, matters to business owners right now, he said.
“It’s the right decision for large corporations to stop surcharging the DST, a tax that no longer exists. We expect all large firms to stop surcharging a tax that was cancelled.”