Expect a ‘big fight’ over digital service tax

​Canada's Deputy Prime Minister and Minister of Finance Chrystia Freeland speaks to journalists on Parliament Hill.
Canada's Deputy Prime Minister and Minister of Finance Chrystia Freeland speaks to journalists on Parliament Hill.
REUTERS/Blair Gable

The US ambassador has once again warned Canada that it should expect consequences if it proceeds with a plan to impose a digital service tax on the tech giants. David Cohen, in response to an audience question at a Canadian Club luncheon in Ottawa, signaled that it could get nasty.

“That will be an area of contention unless it is resolved," he said. “There’s a place where we’re either going to have to have agreement, or we’re going to have a big fight.”

Finance Minister Chrystia Freeland surprised observers, and her friends in the United States, when Canada refused to agree with other countries to delay adopting such a tax at a meeting of the OECD this summer, complaining that it had waited long enough.

The tax would impose a 3% levy on big tech firms — many of them American — that earn revenue from Canadian customers without paying tax in the country. It is scheduled to kick in on Jan. 1.

On Wednesday, Freeland said that after a recent trip to Washington, she was “cautiously optimistic” that she would reach a deal with the Americans and avoid a showdown.

Neither side would benefit from a high-profile dispute over the matter, so a face-saving compromise would be welcomed by both countries’ business communities, which have warned Freeland against forging ahead in the face of opposition from Washington and Silicon Valley. If a showdown has been averted, Freeland may reveal as much in her department’s Fall Economic Statement, due for release later this month.

More from GZERO Media

U.S. President Donald Trump, German Chancellor Friedrich Merz and NATO Secretary General Mark Rutte at a NATO leaders summit in The Hague, Netherlands June 25, 2025.
REUTERS

The two-day NATO summit at the Hague wrapped on Wednesday. The top line? At an event noticeably scripted to heap flattery on Donald Trump, alliance members agreed to the US president’s demand they boost military spending to 5% of GDP over the next decade.

Members of the Basij paramilitary force hold Iranian flag, Lebanese flag, and various militia flags, during a rally commemorating International Quds Day in downtown Tehran, April 14, 2023.
Morteza Nikoubazl via Reuters Connect

As the world reacted to Israel and the US bombing Iran’s nuclear facilities last week, one group was largely silent – Iran’s network of allied militias in the Middle East.

Across North America and Europe, blackouts are becoming more common, often hitting when the demand peaks or when the weather turns extreme. The surging demand for power and new energy sources are putting pressure on the energy systems. Meeting today’s energy needs takes a flexible, pragmatic, “all-of-the-above” approach — drawing on all fuels and technologies. Learn how Enbridge is delivering reliable, affordable energy in uncertain times.