Canada: Government rescinds digital services tax to support U.S. trade talks
On June 29, 2025, the Department of Finance Canada announced that the government will rescind the Digital Services Tax (DST) as part of ongoing efforts to facilitate comprehensive trade negotiations with the United States.
The announcement follows high-level discussions between Canadian and U.S. leaders, with both parties agreeing to resume formal negotiations on a new economic and security partnership, targeting a deal by July 21, 2025.
Key points:
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DST repeal:
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The June 30, 2025, collection of the DST will be halted.
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The Minister of Finance and National Revenue will introduce legislation to formally repeal the Digital Services Tax Act.
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Background:
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The DST was introduced in 2020 to address tax disparities where large digital companies generated revenues in Canada without paying corresponding taxes.
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While Canada has consistently supported a multilateral solution, the national DST was enacted as a temporary measure pending global agreement.
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Trade context:
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The move aligns with broader economic objectives and is intended to advance talks toward a mutually beneficial Canada-U.S. trade arrangement.
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The decision was announced ahead of the July 21 negotiation deadline set during the G7 Leaders’ Summit in Kananaskis.
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The Canadian government emphasized that the policy shift reflects a commitment to the best interests of Canadian workers and businesses, while supporting the strategic goal of achieving a more stable and cooperative economic relationship with its largest trading partner.
Source: canada.ca
VAT/GST rates 2024 in Americas
| Country | Standard VAT/GST Rate | Reduced Rates |
| Antigua and Barbuda | No VAT tax but standard sales tax is set at 15% | Reduced rate of 14% |
| Argentina | The standard VAT rate is 21%. (enhanced rate of 27% for several metered utilities) | Reduced rate of 10.5% |
| Bahamas | Standard VAT rate of 10% | |
| Barbados | The standard VAT rate is 17.5% (Super rate of 22% mobile voice & text services) | A reduced rate of 22%, 10%, 7,5% |
| Belize | There is no value-added tax as such. Belize instead introduced a General Sales Tax in January 2006, which applies to a wide range of goods and services at a 12.5% rate. | |
| Bolivia | The standard VAT (IVA) rate is 13% under Article 15 of the VAT Law | |
| Brazil | Brazil imposes a state tax equivalent to VAT (ICMS) This rate is imposed by each state and is subject to a limit set by the federal senate. The rates can vary in the states from 17% to 18% (Rio de Janeiro has 20% as an exception). and the highest rate can typically reach 25%. | 7% |
| Canada | The standard federal Goods and Services Tax (GST) rate is 5% | |
| Chile | The standard VAT rate is 19%. | |
| Colombia | The standard VAT (IVA – Impuesto sobre las Ventas) rate is 19% | 5% |
| Costa Rica | The standard VAT rate is 13%, the same rate as the sales tax. | 4%, 2%, 0,5% |
| Ecuador | The standard VAT rate is 15% | 5% |
| El Salvador | The standard VAT (IVA) rate is 13% | |
| Faroe Islands | The standard VAT rate is 25% | |
| Guatemala | The standard VAT rate is 12% | |
| Mexico | The standard VAT rate is 16% | 8% |
| Panama | The standard VAT rate in Panama is 7%. There are supplementary rates of 10% and 15% | |
| Peru | The standard VAT rate is 18% | Effective September 1, 2022 until December 31, 2024, a 8% reduced rate will apply to micro and small suppliers of restaurant, hotel, and tourist accommodation services that receive at least 70% of their income from these supplies. |
| Puerto Rico | The sales and use tax (SUT) rate is 11.5% | 1% |
| Uruguay | The standard VAT rate is 22% | 10% |
| USA | There is no VAT in the USA. U.S. state sales and use tax rates vary between 2.9% and 7.25% | Reduced rates are offered for sales of specific products. |
| Venezuela | The standard VAT rate is 16% | 8% |