Digital services tax
The Government of Canada has introduced the digital services tax (DST). The DST requires foreign and domestic large businesses to pay tax on certain revenue earned from engaging with online users in Canada.
The DST applies at a rate of 3% on revenue earned from:
- certain digital services that rely on engagement, data, and content contributions of Canadian users
- certain sales or licensing of Canadian user data
Canadian digital services revenue is calculated on a calendar year basis and is earned from:
- Online marketplace services
- Online advertising services
- Social media services
- Certain sales of user data
Foreign and domestic large businesses affected by the DST will have to apply to register and may have to file a return.
The first year of application of the DST is the 2024 calendar year. In that first year, the tax will apply to taxable Canadian digital services revenue earned since January 1, 2022.
Source of the new tax
The Digital Services Tax Act received royal assent on June 20, 2024 and came into force on June 28, 2024.
Who must apply to register
A foreign or domestic business must apply to register by January 31, 2025, if for any one of the 2022, 2023, or 2024 calendar years:
The business had Canadian digital services revenue greater than nil in the calendar year
The business had, or was a member (in the calendar year or in the prior calendar year) of a consolidated group that had, total revenue of at least €750 million during a fiscal year that ended in the prior calendar year
The business had, or was a member (in the calendar year) of a consolidated group that had, Canadian digital services revenue greater than CAN$10 million in the calendar year
How to apply to register
Information on how to apply to register will be available in fall 2024.
Who must file
A foreign or domestic business must file a return by June 30, 2025, if for any one of the 2022, 2023, or 2024 calendar years:
The business had Canadian digital services revenue greater than nil in the calendar year
The business had, or was a member (in the calendar year or in the prior calendar year) of a consolidated group that had, total revenue of at least €750 million during a fiscal year that ended in the prior calendar year
The business had, or was a member (in the calendar year) of a consolidated group that had, Canadian digital services revenue greater than CAN$20 million in the calendar year
How to file
Information on how to file a return will be available in early 2025.
Contact us
Contact the Canada Revenue Agency if:
- You have a general question about the DST
- You want to request a technical interpretation related to the DST
Related information
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