CRA refunding $647 million collected from repealed digital service tax

Canada Revenue Agency HQ in Ottawa. The agency has been busy refunding amounts collected toward the now-repealed digital services tax. Photo by Errol McGihon/Postmedia

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The Canada Revenue Agency is refunding approximately $647 million collected as a result of the now-defunct digital services tax.

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The federal Liberals repealed it in an attempt to keep trade talks on track last summer, when U.S. President Donald Trump threatened to cut Canada off.

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“Before the government halted collection of the digital services tax on June 30, 2025, the Canada Revenue Agency collected approximately $647 million,” CRA media relations officer Nina Ioussoupova told National Post in an email on Friday.

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Of the amounts collected, Ioussoupova said, about $358 million was used to cover “outstanding tax liabilities of the same taxpayer(s).”

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By late April, about $154 million was refunded to taxpayers, including close to $4 million in interest.

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Ioussoupova said the CRA planned to have the refunds completed in April.

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Over fiscal years 2021–22 to 2025–26, the CRA was provided with $30 million to administer the digital services tax. That covered “implementation of the new tax, systems and form development, and related accommodation and information technology costs,” wrote Ioussoupova.

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Back in 2023, the Parliamentary Budget Office projected the digital services tax would increase federal government coffers by $7.2 billion over five years.

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The legislation to repeal the tax was part of Ottawa’s fall budget bill, which was passed on March 26. The legislation was necessary to enable the CRA to issue the refunds.

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When it was in active operation, the digital services tax was applied annually as a three per cent tax on digital services revenue generated within Canada by large tech giants, mainly companies primarily based in the U.S.

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The U.S. government had protested the digital services tax, which Washington saw as unfairly targeting American tech companies.

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However, last year, the U.S. backed away from threatened tax hikes on companies from foreign countries such as Canada that applied taxes seen by Washington lawmakers as discriminatory against American companies.

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The retreat was a reaction to G7 finance ministers announcing that the U.S. would be excluded from the OECD-led global minimum tax regime, which was designed to ensure certain multinational enterprises are subject to a minimum tax rate in every jurisdiction they operate.

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