Finance Minister François-Philippe Champagne speaks to reporters as he arrives at a cabinet meeting on Parliament Hill in Ottawa on Thursday. Mr. Champagne told reporters the digital sales tax will apply as planned.PATRICK DOYLE/The Canadian Press
Canada is proceeding with a digital sales tax that requires first payments June 30 despite Donald Trump’s objections to a levy that hits global tech giants, Finance Minister François-Philippe Champagne said Thursday.
The measure will likely exacerbate the United States-Canada trade war that Mr. Trump launched in March, but leaving the tax in place also gives Canada leverage in continuing talks to end the conflict.
As The Globe and Mail has previously reported, scrapping the digital sales tax is among U.S. demands in current negotiations with Canada to reach a new economic and security deal with the White House that could end the damaging trade war.
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Mr. Champagne told reporters the tax will apply as planned. “That law was passed in Parliament. It applies, so that’s where we are today,” he told reporters.
He acknowledged the future of the digital tax is “is something that we’re considering as part of broader discussions.”
Prime Minister Mark Carney announced Monday after a meeting at the Group of Seven summit in Kananaskis that he and Mr. Trump had set a 30-day target to reach a deal.
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The tax will hit companies like Amazon AMZN-Q, Google parent Alphabet GOOGL-Q, Meta META-Q, Uber UBER-N and Airbnb ABNB-Q with a 3-per-cent levy on revenue from Canadian users.
It will apply retroactively, leaving U.S. companies with a US$2-billion bill due at the end of the month.
Canadian and U.S. business groups, organizations representing U.S. tech giants and American members of Congress have all signed letters calling for the tax to be eliminated or paused.
The digital sales tax imposes a 3-per-cent levy on Canadian revenue from digital services exceeding $20-million that is earned by companies with at least $1.1-billion in global revenue. This would include revenue from search engines, social-media platforms and online marketplaces.
Going forward, U.S. companies are expected to pay up to $2.3-billion annually.
With files from The Canadian Press