What Is Digital Services Tax (DST) in Canada? Explained

Digital Services Tax (DST) in Canada: What Digital Businesses Must Know

Canada has joined a growing list of countries imposing a Digital Services Tax (DST) targeting foreign and local tech giants profiting from Canadian users without a physical presence here.

What Is Canada’s DST?

DST is a 3% tax proposed on revenue earned from certain digital services delivered to Canadian users. This applies mainly to large tech companies and platforms offering:

• Online advertising

• Social media networks

• Digital marketplaces

• Streaming services

• Data monetization

The DST is not yet enforced but is set to take effect retroactively from January 1, 2022, once approved.

Who Will Be Affected?

The DST is aimed at large corporations with:

• Global revenue over €750 million

• Canadian digital revenue over $20 million

Though smaller Canadian startups are currently exempt, the DST could impact:

• Ad agencies using foreign platforms

• E-commerce sellers on digital marketplaces

• Developers monetizing data or content internationally

Why It Matters for Canadian Businesses

• Cost Pass-Through: Global platforms (like Google, Meta, Amazon) may pass DST costs to Canadian businesses via higher ad or service fees.

• International Compliance: If your digital service targets other countries, you may be subject to DSTs abroad.

DST vs. Sales Tax (GST/HST)

DST is not a replacement for GST/HST. It targets digital revenue not product or service sales and only applies to large firms, not SMBs.

What’s Next?

The federal government plans to proceed with DST enforcement even without a global tax agreement. Businesses in tech, digital media, and e-commerce should start preparing for indirect impacts.