Canada enacted the Digital Services Tax Act (DSTA) on 20 June 2024, which came into effect by Order in Council on 28 June 2024. Starting in the 2024 calendar year, new tax reporting requirements mandate digital platforms to collect and verify information from sellers who offer goods, services, or real property rental services on their platforms.
Under the Act, a 3% Digital Services Tax (DST) will apply to companies with a total global revenue of CAD 1.1 billion or more or those generating CAD 20 million in revenues.
Companies generating revenues from sources such as online marketplace services, online advertising platforms, social media networks, and user data sales will fall under the purview of the Digital Services Tax Act.
Enterprises who fulfill the requirements are required to register with the Canada Revenue Agency (CRA) by 31 January, 2025, and must submit their first Digital Services Tax (DST) return by 30 June, 2025.
Non-compliance will lead to penalties and interest charges.
Digital platform operators subject to these regulations must gather all necessary data before the filing deadline with the CRA. As of now, the CRA has not released guidance regarding these new obligations and related filing processes.
The digital services tax (DST) will take effect on 1 January, 2024 and will be applied retroactively to all relevant revenues generated since 1 January, 2022.
