Ottawa must pass a law revoking digital service tax before it can issue refunds: CRA

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OTTAWA — Companies that paid the now-defunct digital services tax will have to wait for Ottawa to pass new legislation before they can get their refund, the Canada Revenue Agency has confirmed.

Prime Minister Mark Carney announced late Sunday that Canada was dropping the tax on global tech giants in a bid to restart trade negotiations with the United States.

The first payment was due Monday and would have collectively cost American companies like Amazon, Google, Airbnb, Meta and Uber about US$2 billion. The tax was a three per cent levy on revenue collected by digital firms from their Canadian users and the first payment was retroactive to 2022.

A CRA spokesperson said the agency collected some revenue from the digital services tax before Ottawa’s reversal but didn’t cite an amount.

The spokesperson said Parliament will need to pass legislation formally revoking the tax in order for taxpayers to get their money back. Members of Parliament are currently on break and are scheduled to return on Sept. 15.

The CRA waived the requirement for taxpayers to file a DST return ahead of the June 30 deadline and will not ask for any related payments in the meantime.

Carney said Canada and the U.S. restarted trade talks Monday morning and are still aiming for a deal by the July 21 deadline he set when he and U.S. President Donald Trump met in Alberta at the G7 summit last month.

After Carney announced the end of the digital services tax, the White House claimed that Canada had “caved” under pressure from Trump.

The prime minister said Monday that the move was “part of a bigger negotiation” and “something that we expected in the broader sense that would be part of a final deal.”

Carney said the decision would provide businesses with some certainty.

“It doesn’t make sense to collect tax from people and then remit them back,” he said on Monday.

Some businesses reported the last-minute change caused some confusion among companies that were in the process of paying the tax.

Tariq Nasir, a partner at EY Canada’s indirect tax practice, said Monday that some companies have given instructions to pay the tax, but the payments were not going through at the CRA.

He said companies that have made the payments were wondering how to account for the payments in their quarterly statements, due in the next month.

— With files from Anja Karadeglija and David Baxter