Google and Amazon have been charging advertisers a fee for ads shown and served through their platforms in Canada since October 2024.Annegret Hilse/Reuters
U.S. tech giants will continue charging Canadian advertisers a fee to cover the digital services tax, which the federal government has yet to enforce and has vowed to cancel.
Tech companies say they’re waiting on Ottawa to table official legislation to drop the tax before making a decision about cancelling or refunding surcharges on Canadian advertisers. But without a clear timeline for legislation to be passed and Parliament on summer break, Canadian businesses will continue to see the policy affect their bottom line.
Advocates say that amounts to an unfair and unnecessary penalty.
“It’s not that complicated. If they don’t pay the tax, they don’t surcharge. This is our expectation,” said Jasmin Guénette, vice-president of national affairs for the Canadian Federation of Independent Business.
Prime Minister Mark Carney rescinded Canada’s controversial digital services tax on Sunday, two days after U.S. President Donald Trump threatened to walk away from trade talks and impose retaliatory tariffs over the levy.
The first payment of the tax, which was retroactive to 2022 and set to be collected June 30, would have applied to revenues collected by large tech companies from online marketplaces, social-media platforms, sale and licensing of user data, and online ads. Collectively, it would have cost American companies such as Amazon.com Inc., Google, Airbnb Inc., Meta Platforms Inc. and Uber Technologies Inc. about US$2-billion.
Explainer: Canada cancelled its digital services tax. What was it and why did the U.S. hate it?
When the Liberal government’s DST was approved at the end of June last year, it prompted foreign tech giants to apply surcharges to ads shown in Canada, in anticipation of having to pay the levy.
On Oct. 1, 2024, Google began adding a 2.5-per-cent DST fee for ads shown in Canada. On the same day, Amazon implemented a 3-per-cent digital services fee for ads served and purchased in Canada.
Despite Mr. Carney calling off the levy, Julia Lawless, a spokesperson for Amazon, said the company was waiting for further guidance from the government before making any decisions about the future of its surcharge.
“Amazon applauds Canada’s decision to rescind the Canada Digital Services Tax Act. Digital services taxes are discriminatory, stifle innovation, and harm consumers, and we appreciate the U.S. government’s work to address DSTs around the world,” Ms. Lawless wrote in an e-mail.
Google declined to comment on whether it would pause or cancel its surcharge. Both companies would not say whether refunds would be issued to Canadian advertisers who were charged pre-emptively.
Audrey Milette, director of communications at Finance Canada, said the Canada Revenue Agency “confirmed that it will not require businesses to file a DST return by June 30, 2025, or pay any amounts owing at this time.”
She added that Finance Minister François-Philippe Champagne will bring forward legislation to rescind the DST Act soon, but was unable to provide an exact date.
Given this, Ms. Milette said, it was the government’s expectation that companies charging additional fees would “review and adjust their pricing practices accordingly.”
Sonia Carreno, president of the Interactive Advertising Bureau of Canada, said since the DST Act was embedded within Bill C-59 and did not require new legislation to take effect, Mr. Champagne’s public statement should be sufficient for companies to stop passing on the cost of the levy to Canadian advertisers.
However, for now, Canadian businesses continue to pay a fee to help tech giants cover the cost of a tax that’s no longer being enforced – without an end date or refund in sight.
With consumer spending in decline, paying an extra 2 per cent to 3 per cent to advertise online is punishing for small businesses that rely heavily on digital platforms for visibility, the CFIB’s Mr. Guénette said.
“If that surcharge is not in place any more, it’s going to help small businesses stretch that advertising dollar.”