Canada’s digital services tax is here. How could it affect you?

The Digital Services Tax is now in effect.

Foreign tech giants must now pay a three per cent levy on revenue from Canadian users, retroactive to 2022, after the federal government enacted the measure with an order-in-council on June 28.

Many of those large companies are based in the United States and the American government and business communities on both sides of the border have called for Ottawa to stop the measure.

“It’s a risky idea,” University of Ottawa professor Michael Geist told Global News.

“If we take a look at how (the United States) reacted to similar taxes from other countries in the past,” he continued, “they’ve used tariffs to try to make up for what they perceive to be lost revenue, or to almost punish other countries for moving in that direction.”

The Office of the United States Trade Representative previously said it will do what’s necessary to halt Canada’s tax on large foreign digital services companies, while a group representing giants like Amazon, Apple and Uber, called on President Joe Biden to take formal steps under the U.S.-Mexico-Canada Free Trade Agreement.

“With Canada’s DST now law, the time has now come to announce action,” vice-president of the Computer and Communications Industry Association Jonathan McHale said in a news release.

Ten similar groups also called on the U.S. government to take action.

“It’s quite reasonable to expect that the U.S. will take measures,” Matthew Holmes with the Canadian Chamber of Commerce said.

He said it is a “sensitive time” now in the U.S., with presidential and congressional elections later this year.

“Right now does not seem to be the time where we would be adding more irritants to the trade relationship,” he told Global News — especially because Canada relies