In an article written for Bloomberg Tax, partners Patrick Marley and Kaitlin Gray suggest that Canada’s eleventh-hour decision to cancel its digital services tax (DST) means Canadian taxpayers will bear the administrative costs of a levy that will not generate any revenue.
Canada rescinded its DST on June 29 — the night before the first payments were due. It was clear from the time the tax was first proposed that it would not be well received by the United States., home to most of the affected taxpayers. President Donald Trump had threatened to end all trade discussions with Canada and impose a fresh tariff rate in early July in retaliation for the digital tax.
By the time the DST was cancelled, however, many companies had already made significant payments to the Canada Revenue Agency (CRA). The CRA has indicated that Parliament must pass legislation formally repealing the DST before taxpayers can receive refunds for amounts already paid. With Parliament on summer break and no clear timeline for passing new legislation, the earliest date for refunds would likely be mid- to late fall.
The authors proposed some ways the government could quickly address refunds for companies without waiting for Parliament to repeal the tax, including a remission order, which would instruct the CRA to refund taxes where collection is unreasonable or not in the public interest.
Some taxpayers did not pay the DST ahead of the June 30 deadline, while others did. The authors conclude that waiting until the last possible moment to comply with tax reporting and payment requirements may be advantageous.
Read the full article by authors Patrick Marley and Kaitlin Gray posted on July 16, 2025
