Will Canada’s Digital Services Tax Increase Costs for Tourism Marketers & Operators?

The federal government recently announced the implementation of a Digital Services Tax (DST) of 3% to be charged on revenue generated from digital services that are provided to Canadian users by large multi-national companies with at least $20 million in Canadian digital services revenue.

This will include digital advertising, online marketplaces such as OTAs, social media, data services, and more.  The current tax scenario includes a retroactive start date of January 1, 2022.  The government’s rational for the DST is to raise revenues on digital services delivered in Canada by organizations without a Canadian presence/operation.

TIAO has been notified by members that a few digital platforms have started to communicate plans to add surcharges to digital services in response to this tax to recover costs.  TIAO is concerned that the tax and surcharge practices, if widely adopted, may increase digital marketing costs for destination marketers and operators at a time when we need every available dollar working hard to stimulate visitor and spending growth.  While the United States government is challenging the DST under the “Canada Unites States Mexico (trade) Agreement” (CUSMA), outcomes cannot be predicted at this time.

TIAO is sharing this update today to put the issue on your radar, particularly organizations that spend on digital platforms.  We are working closely with our national association partners on advocacy work and will keep you posted.  In the meantime, please do not hesitate to be in touch with questions.

In other news, Immigration, Refugees, and Citizenship Canada (IRCC) has communicated further restrictions with respect to international students and workers for 2025.  TIAO will assess these new developments and share implications and next steps with members soon. Link to the News Release.

Sincerely,

Andrew Siegwart

President & CEO

Tourism Industry Association of Ontario