Canada has its digital service tax aimed at US technology companies on Sunday, just a few hours before it came into force, in an attempt to promote trade negotiations with the United States.
Canadian Prime Minister Mark Carney and US President Donald Trump will resume trade negotiations to coordinate a deal on July 21, the Financial Ministry of Finance in Canada said in a statement.
Trump abruptly agreed on Friday about the tax on the tax that focused on American technology companies, and said it was a ‘flagrant attack’.
He repeated his comments on Sunday and promised to determine a new rate percentage on Canadian goods within the following week, which threatened to push the relations between the US canada back into chaos after a period of relative calm.
The breakdown in trade discussions comes after the two leaders met on the G7 in mid -June and Carney said they had agreed a new economic agreement within 30 days.
The planned digital load of Canada was 3% of the income from the digital services that a company records in a calendar year of Canadian users of Canadian users and payments had to be retroactively until 2022.
It would have influenced the American technology companies, including Amazon Amzn.o, Meta Meta.O, Alphabet’s Google Googl.o and Apple Aapl.O, among other things.
The collection will be stopped on Monday, according to the statement of the Financial Ministry of Finance, and Minister of Finance François-Philippe Champagne will raise the legislation to withdraw the Digital Services Tax Act.
“The DST was announced in 2020 to tackle that many large technology companies that are active in Canada do not pay any taxes on income generated by Canadians,” said the statement. “The preference of Canada has always been a multilateral agreement with regard to tax on digital services.”
Stocks Index Futures rose after the news that the digital load will be withdrawn and the bullish sentiment will be transferred to Asian markets.
Canada is the second largest American trading partner after Mexico and the largest buyer of American exports. According to data from US Census Bureau, it bought $ 349.4 billion in American goods last year and exported $ 412.7 billion to the US.
The Biden administration had asked in 2024 to ask consultations with regard to the tax conflicts about the tax and said that it was not consistent with the North -American trade obligations of Canada.
Canada had escaped the wide rates of Trump that were imposed in April, but is confronted with 50% tasks on steel and aluminum.
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