This article was originally published in Canadian Dimension.
Finance Minister François-Philippe Champagne told reporters recently that Canada will be going ahead with its digital services tax on Big Tech companies, which will take effect on June 30. The DST empowers the federal government to impose a three percent tax on revenues that behemoths like Google, Amazon, and Netflix generate in Canada—no matter where they are headquartered.
In 2024, Alphabet (Google’s parent company) raked in over USD$350 billion in global revenues, while Meta accumulated more than USD$164 billion. Due to a lack of transparency, these companies don’t share how much revenue they generate by country, but estimates suggest Metaand Google each collect over $5 billion in annual revenue here in Canada.
Because of the ability of giant multinational corporations to shift profits across national borders, we don’t know that any of this revenue is taxed in Canada. The DST is designed to change that.
DST ensures Big Tech is taxed where they make their money
The DST is not a sales tax, which means it isn’t charged to consumers. It’s also not a tax on profits in Canada. Instead, it is applied directly to global tech firms pulling in over $1 billion a year globally and over $20 million in annual Canadian revenue. This makes it harder for multinational corporations to dodge taxation by using creative accounting methods to move their profits offshore.
The result will be $7.2 billion in new revenue over five years, according to the Parliamentary Budget Office. That means more federal money for housing, transit, and health care transfers—all from some of the largest and most under-taxed companies in the world.
In addition to ensuring massive tech companies pay their fair share when operating in Canada, the DST could serve as a critical tool in response to the Trump administration’s proposed “revenge tax.”
A key provision in Trump’s Big Beautiful Bill Act, the so-called revenge tax would allow the US to apply higher taxes on foreign people, investors, and businesses in countries the White House deems impose “unfair foreign taxes.”
American analysts warn that this attempt to attack nearly 100 countries working to hold multinational corporations accountable across borders and punish countries that impose DSTs could backfire, damaging foreign investment into the US and undermining confidence in US dollar-denominated assets.
American civil society organizations, think tanks, and even businesses across the political spectrum are ringing the alarm bells on Trump’s bill. If implemented, it could cause 51,000 preventable deaths, destroy social safety nets, and hand over billions of dollars to wealth-hoarding American billionaires while scaring off the very investors Trump says he’s trying to attract.
All in all, it’s a race to the bottom and is bad news for Canadians and Americans alike.
If “elbows up” is going to be more than just a slogan, Canada can’t cave to pressure when Donald Trump throws his weight around.
But this slogan also means the Carney government has to make sure it is working on behalf of everyday Canadians—not just the ultra-rich and big corporations that are only “Canadian” when it’s convenient.
Prime Minister Carney has already scrapped the planned increase to the capital gains inclusion rate, introduced a new tax cut that disproportionately benefits higher earners, and gutted the Canada Revenue Agency. Two-thirds of the revenue from the partial closure of the capital gains loophole would have come from the top 1.5 percent of earners. As Oxfam recently showed in the US, cuts to national revenue services like the CRA or the IRS undermine our ability to prevent the wealthy and large corporations from evading taxes, resulting in billions of missing revenues every year. All of these actions benefit the wealthiest among us at home and abroad, helping them to pay less in taxes and more easily evade scrutiny, while ordinary people are left bearing more of the load.
Keeping the DST is a sorely needed step in the right direction, but it is just one step. To build a more independent and resilient Canada, we need an equitable and just tax system that works for the vast majority of Canadians.
