Ottawa must pass law to revoke digital service tax, before it can issue refunds: CRA

The Canada Revenue Agency (CRA) says companies that paid the now-defunct digital sales tax will have to wait for new legislation before they can get their refund.

Prime Minister Mark Carney announced late Sunday that Canada was dropping the tax on global tech giants in a bid to restart trade negotiations with the United States.

This followed after U.S. President Donald Trump suddenly “terminated all discussions on trade with Canada” Friday afternoon after Ottawa’s plan to push ahead with a digital services tax to take effect at the end of June.

The first payment was due Monday, and would have collectively cost American companies like Amazon, Google, Airbnb, Meta and Uber about US$2 billion.

The tax was a three per cent levy on revenue collected by digital firms from their Canadian users and the first payment was retroactive to 2022.

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A CRA spokesperson said the agency collected some revenue from the digital services tax before Ottawa’s reversal, but did not cite an amount.

The spokesperson said Parliament will need to pass legislation formally revoking the tax in order for taxpayers to get their money back. Members of Parliament are currently on break and are scheduled to return on Sept. 15.

“If legislation is tabled in Parliament and receives Royal Assent, those who have already paid will have their payments returned to them,” reads an update on the digital services tax page on the official Government of Canada website.

The CRA waived the requirement for taxpayers to file a DST return ahead of the June 30 deadline and will not ask for any related payments in the meantime.

Carney said Canada and the U.S. restarted trade talks Monday morning and are still aiming for a deal by the July 21 deadline he set when he and U.S. President Donald Trump met in Alberta at the G7 summit last month.

After Carney announced the end of the digital services tax, the White House claimed that Canada had “caved” under pressure from Trump.

The prime minister said Monday that the move was “part of a bigger negotiation” and “something that we expected in the broader sense that would be part of a final deal.”

Carney said the decision would provide businesses with some certainty.

“It doesn’t make sense to collect tax from people and then remit them back,” said Carney on Monday.

With files from The Canadian Press.

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