Google Drops Canadian Ad Fee After Digital Services Tax Cancellation

Google has stopped charging a 2.5% fee for Canadian advertisers, citing the cancellation of Canada's digital services tax. The fee was introduced in October 2024 to cover the cost of the tax, which would have cost US$2 billion for US companies. Google will issue refunds to advertisers who were charged pre-emptively. Amazon has yet to make any changes to its 3% digital service fee for ads in Canada.

Google (GOOG-Q) has announced the cessation of a 2.5% fee it had been charging Canadian advertisers, citing the cancellation of Canada's digital services tax (DST). The U.S. tech giant made this announcement on July 1, 2025, stating that it will issue refunds to advertisers who were charged pre-emptively. The decision follows Prime Minister Mark Carney's announcement on June 30, 2025, that the DST would be rescinded following threats from U.S. President Donald Trump to walk away from trade talks and impose retaliatory tariffs over the levy.

The DST, which was retroactive to 2022, would have cost U.S. companies such as Amazon.com Inc. (AMZN-Q), Google parent Alphabet Inc., Airbnb Inc., Meta Platforms Inc., and Uber Technologies Inc. approximately US$2 billion. It applied to revenues collected via online marketplaces, social-media platforms, the sale and licensing of user data, and online ads. Google's surcharge had been removed as of July 1, 2025, and this change will be reflected in invoices for the month. Refunds will be issued once the federal government officially rescinds the Digital Services Tax Act, which is expected to happen in the fall when Parliament resumes [1].

Amazon.com Inc., which implemented a 3% digital service fee for ads served and purchased in Canada on the same day as Google last year, has yet to make any changes. Amazon spokesperson Julia Lawless stated, "While the Canadian Government announced it would rescind its digital services tax, it has yet to do so. As we await the government to fulfill its commitment, our billing and operations in Canada will continue as normal" [1].

Sonia Carreno, president of the Interactive Advertising Bureau of Canada, expressed encouragement at Google's action. "This tax caused significant administrative disruption across the online advertising sector, and it's evident that impacted platforms are now beginning the complex task of reversing pass-through costs and as a first step, ceasing collection," she said [1].

The cancellation of the DST is a significant development for the digital advertising industry. The tax was heavily contested by companies and industry associations who argued that it would disproportionately affect small businesses and consumers. Jasmin Guénette, vice-president of national affairs for the Canadian Federation of Independent Business, highlighted the importance of the decision, stating, "It’s the right decision for large corporations to stop surcharging the DST, a tax that no longer exists. We expect all large firms to stop surcharging a tax that was cancelled" [1].

References:
[1] The Globe and Mail. "Google stops charging Canadian advertisers extra fee for digital services." Retrieved from https://www.theglobeandmail.com/business/article-google-stops-charging-canadian-advertisers-extra-fee-digital-services/