Canada has scrapped a tax on big US technology firms, just hours before it was due to come into force, to allow trade talks between the two countries to restart.
On Friday, US President Donald Trump called off negotiations over a trade deal, describing the tax as a blatant attack, and threatened higher tariffs on imports from Canada.
In response, Canada has said it is removing the tax, which should have come into effect on Monday.
The digital services tax, DST, would have meant US tech giants including Amazon, Meta, Google and Apple, facing a 3 per cent charge on Canadian revenue above US$20 million.
Canada’s finance minister François-Philippe Champagne issued a statement saying the tax would be rescinded.
It said the DST was announced in 2020 to address the fact that many large technology companies operating in Canada may not otherwise pay tax on revenues generated from Canadians.
The statement added that Canada’s preference has always been a multilateral agreement related to digital services taxation.