Last Updated On 15 May 2025, 8:32 AM EDT (Toronto Time)
In the middle of 2024, Canada introduced a new digital services tax for anyone who trades goods and services online.
The legislation bedded in throughout the year and, almost twelve months on, we can start to see its effects across many industries.
Everyone who sells a product or service online must adhere to the new tax laws, and one area that has seen many changes is the casino sector.
It’s been one of the success stories of Canada’s digital landscape in recent years, and its revenue has produced a significant boost to the national economy.
Best online casinos Canada offers are above the threshold laid down by the legislation.
Has their income been affected, and has the digital service tax changed the industry in any way?
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The Digital Services Tax Act came into effect on June 28, 2024, and the level was set at 3% for revenue that exceeded C$20 million.
The accounting period has almost run its course, and those affected must make the first payment by the end of June 2025.
The act applies to anyone trading in Canada, so that includes businesses whose headquarters are based either here or overseas.
Perhaps the most significant ruling in relation to the Digital Services Tax is the fact that it is applied retrospectively.
The retroactive effect applies from January 2022, and a number of casino operators have already reacted.
The fact that casino brands are taxed at source carries the biggest implications for the industry.
For many years, many offshore operators have provided services to Canadian players despite having their main headquarters outside of the country.
It’s a fair ruling, but it’s also one that is likely to have the biggest impact in the casino industry here.
Currently, Canadian players have a wide range of brands to choose from, but that may not be the case in the future.
Over in the United Kingdom, a similar ruling was introduced in 2014. From that point, anyone offering casino or other digital gambling services in the UK would be taxed at source.
The Gambling Tax Reform from December 2014 had an instant impact, with many overseas operators instantly closing their doors.
More than ten years on, there are some established brands that will no longer accept UK customers, and that’s the biggest concern for the industry in Canada. Moving forward, will casino brands drop out of the market?
In March 2025, a British gambling company announced that it would no longer be providing services in Ontario.
The Canadian province opened its doors in 2022 and is has since proved to be one of the success stories of the gambling industry in the country.
While national revenue has increased, the operator in question cited rising business costs as a reason for their withdrawal and that should be a concern.
Ontario requires a $100,000 annual licensing fee and it asks for 20% of all revenue to be handed over to the provincial government.
The latest news means that three operators have recently withdrawn from the market here.
While it is early days in terms of the digital service tax, the news from Ontario may be an indicator of what we can expect in the future.
Ontario’s licensing fees are higher than elsewhere, but rising business costs across the country are the biggest potential issue.
The true effect of the tax has yet to be seen, but a reduction in operators could be the logical result moving forward.
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