Canada Digital Services Tax Guide (DST)
the Digital Services Tax (DST) in Canada. The DST is a 3% tax on the "digital services revenue" earned by the large businesses (the "in-scope entities" — the businesses with the global revenue above $1.1 billion and the Canadian revenue above $20 million). The DST was introduced in the 2021 Federal Budget and was enacted in the 2024 Federal Budget (the "Digital Services Tax Act" — the "Bill C-59" — the "DST legislation"). The effective date is January 1, 2024, with the retroactive application to the revenue earned from January 1, 2022. The "in-scope revenue" includes the revenue from the "online marketplace services" (the "e-commerce platforms", the "app stores", the "service marketplaces"), the "online advertising" (the "targeted advertising" and the "digital display advertising"), the "social media platforms" (the "social networking services", the "content sharing platforms"), and the "user data" (the "sale of the user data", the "data licensing"). The DST does NOT apply to the "financial services" (the "payment processing", the "lending platforms", the "insurance marketplaces"), the "intercompany transactions" (the "revenue between the related entities"), and the "government services". The DST registration — the "DST account" (the BN + the "DT" program code) is required for the "in-scope entities". The DST return — the Form B600 (the "Digital Services Tax Return") is filed annually. The DST and the international treaties — the DST is the "unilateral" Canadian tax pending the implementation of the "OECD Pillar One" (the "global digital tax" — the "Amount A" — the "reallocation of the taxing rights"). The US-Canada trade concerns — the US has expressed the strong opposition to the Canadian DST (the "potential US trade retaliation" — the "tariffs on the Canadian goods").
DST Scope
- In-scope entities: The businesses with the global revenue above $1.1 billion (the "global revenue threshold") and the Canadian revenue above $20 million (the "Canadian revenue threshold"). The thresholds are indexed to the inflation.
- In-scope revenue: The revenue from the "online marketplace services" (the "Amazon Marketplace", the "Apple App Store", the "Google Play Store", the "Airbnb", the "Uber"), the "online advertising" (the "Google Ads", the "Facebook Ads", the "Amazon Ads"), the "social media platforms" (the "Facebook", the "Instagram", the "TikTok", the "YouTube", the "LinkedIn"), and the "user data" (the "sale of the user data to the third parties").
- DST rate: 3% of the "in-scope revenue" allocated to Canada. The DST is calculated on the "gross revenue" (the "total in-scope revenue from the Canadian users").
DST Exemptions
- Financial services: The "payment processing", the "lending platforms", the "insurance marketplaces", the "investment platforms", and the "online banking" are exempt from the DST.
- Intercompany transactions: The "revenue between the related entities" (the "intra-group transactions") is exempt from the DST.
- Government services: The "government services" (the "digital services provided by the government entities") are exempt from the DST.
DST Registration & Return
- DST account: The "Digital Services Tax account" (the BN + the "DT" program code) — the in-scope entity must register for the DST account through the CRA My Business Account.
- DST return: The Form B600 (the "Digital Services Tax Return") is filed annually. The DST return is due within 6 months of the end of the calendar year (the "DST return deadline").
- DST payment: The DST is payable in the quarterly instalments (the "DST instalments" — the "estimated DST" — the "quarterly DST payments").
For the GST/HST on the digital economy and the platform reporting, see our GST/HST Guide →. For the international tax treaties and the OECD Pillar One, see our Cross-Border Tax Guide →.