The European Commissioner Wopke Hoekstra responded that the European Commission notes Canada’s decision to suspend its digital services tax but considers it a sovereign matter and will not comment further.
The European Parliament released a response on 29 September 2025 from European Commissioner Wopke Hoekstra addressing questions raised in July concerning Canada’s decision to abolish its digital services tax and related issues.
The response from Hoekstra is as follows:
Answer given by Mr Hoekstra on behalf of the European Commission
The Commission takes note of the Canadian Government’s decision to suspend its planned implementation of a digital tax. As this is a sovereign policy decision, it is not a matter for the European Commission to comment on.
As stated, the Commission and its Member States would prefer a multilateral solution to the tax challenges arising from the digitalisation of the economy.
Significant work in this regard has been undertaken by the Organisation on Economic Cooperation and Development (OECD) as part of Pillar 1 of the Two-Pillar solution.
For the time being, the OECD discussions on Pillar 1 are temporarily on hold. However, the United States (US) administration has communicated its intention to resume the discussions on Pillar 1 once a solution on Pillar 2 is found.
The recent G7 statement issued on 28 June 2025 on the co-existence of Pillar 2 with the US tax system gives a positive signal towards finding solutions. The Commission therefore expects that the discussions on Pillar 1 could resume at OECD later this year.
The Commission aims to focus its efforts on developing and securing a successful multilateral solution at global level. This requires providing the OECD process with the requisite space and time to develop.
The Commission will continue to engage constructively with third countries, including the US, to foster a multilateral solution within the OECD.
In case a global solution cannot be agreed upon, the Commission would remain in close contact with the European Parliament and Member States on the best way forward.
It is the sovereign right of the EU and its Member States to put in place tax policies that ensure fair and equitable taxation of all economic operators, including in the area of digital taxation.
The questions raised on 10 July 2025 concerning Canada’s decision to abolish its digital services tax and related issues are as follows:
Scrapping of the Canadian digital tax and US pressure
The Canadian government recently announced the suspension of its planned digital tax to avoid tensions with the United States and relaunch trade talks. This decision was taken under direct diplomatic pressure from Washington, despite previous Canadian pledges on fair taxation of digital technology companies.
Within the EU, effective measures against tax avoidance by large digital platforms have also failed to materialise as yet. Initiatives are often postponed or weakened under the influence of international pressure.
In view of this:
- What is the Commission’s assessment of Canada’s decision to scrap its digital tax under pressure from the United States?
- Does the Commission face similar pressures from third countries, in particular the US, regarding its own proposals for a digital tax
- What is the state of play regarding European plans to tax digital services in a fair way, both within and outside the OECD framework?
