Canada’s Digital Sovereignty: Stop Talking, Start Building

And you can deal with the Digital Services Tax dilemma at the same time!

By John Ruffolo, Founder of Maverix Private Equity & Co-Founder of the Council of Canadian Innovators (CCI)

Let’s stop pretending.

“Digital sovereignty” isn’t some policy seminar buzzword. It’s about whether Canada actually owns its digital future—or whether we’re just going to be the farm team forever, sending our best talent and ideas south while foreign tech giants rake in the profits.

And right now, let’s be blunt: we’re losing.

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What Digital Sovereignty Actually Means

Think of sovereignty over land: it’s in Canada, governed by Canadian law, protected by Canadian institutions.

Digital sovereignty is no different. If Canadian data is sitting on a server in California, governed by U.S. law, let’s not kid ourselves—Canada has no sovereignty over that data.

So let’s be clear: if you want to sell digital goods or services to Canadians, you should be required to host them in Canada. Servers are just digital warehouses. That’s where the products are stored, processed, and shipped out. And just like a physical warehouse, they can create a taxable presence whether you decide to own or lease them.

No sovereignty without servers. Period.

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Why the Digital Services Tax Was Always a Dumb Idea

The recently cancelled Digital Services Tax (DST)? Good riddance. It was a policy dead end.

It was sold as a way to make big foreign tech companies pay up. In reality, it was a glorified tariff on digital goods. And tariffs are blunt, ugly instruments. They raise prices for Canadians, piss off trading partners, and do nothing to solve the real sovereignty problem.

The fix is straightforward: treat digital the same way we treat physical. If you’ve got a digital warehouse (a server in Canada) either owned or leased, you’re subject to corporate income tax in Canada. Use transfer pricing rules, figure out the fair share of profits, and tax them accordingly. (I will not do a deep dive on the Canadian corporate taxation elements of “carrying on business in Canada” nor the Income Tax treaty considerations.)

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Even the U.S. Gets It: TikTok

If you think this sounds radical, take a look at what the United States is doing with TikTok.

Washington isn’t debating some clever tax on TikTok subscriptions. They’re saying, flat out: if a foreign company controls a platform that hoovers up sensitive American data, then America has no sovereignty over that data. Period. That’s why they’re forcing TikTok to either divest its U.S. operations or shut down.

You may agree or disagree with how far they’re going—but the principle is clear: data sovereignty matters.

If the most powerful digital economy on earth is scrambling to claw back control of its own digital infrastructure, what excuse do we have in Canada for sitting on our hands?

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Why This Is Urgent

Look around.

AI is eating the world. Healthcare is becoming digital-first. Our banks and fintechs live on servers. Defense is cyber as much as boots on the ground. Data is the new uranium—except we’re letting foreign companies mine it, refine it, and sell it back to us.

The Council of Canadian Innovators (CCI), which I co-founded with Jim Balsillie, has been hammering this point for years: Canada needs a digital strategy rooted in sovereignty. Not more half-baked taxes or “consultations.” Real rules that level the field for Canadian companies.

Because without sovereignty, our innovators will always be playing in someone else’s sandbox.

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What Real Policy Looks Like

Let’s stop overthinking it. A serious Canadian digital sovereignty policy would:

1. Mandate Canadian servers. If you want to sell digital goods or services here, host them here.

2. Treat servers as warehouses. Once you’ve got a warehouse, you’ve got a taxable presence.

3. Apply corporate income tax. Use transfer pricing rules, assign profits fairly, and tax them like any other company.

4. Reinvest in Canadian innovators. Use that revenue to back domestic champions in AI, fintech, cybersecurity, healthtech—the sectors that will define sovereignty.

That’s it. No tariffs, no gimmicks, no digital services tax. Just basic, grown-up policy.

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Founders: This Fight Is Yours Too

Canadian founders: this isn’t some abstract Ottawa debate. It’s about whether you’ll ever get a fair shot to build globally competitive companies here.

If foreign giants can extract Canadian data, dodge Canadian taxes, and skate past Canadian regulation, you’re screwed before you even start.

Digital sovereignty levels the ice. Without it, we’re just training talent for Silicon Valley. With it, we’ve got a shot at building global champions headquartered in Canada.

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Policy Makers: Time to Act

Policy makers: drop the symbolism. Stop wasting everyone’s time with half-measures like the DST.

Yes, foreign companies will complain. Yes, Washington will grumble. Sovereignty isn’t supposed to be convenient. It’s supposed to be non-negotiable.

We regulate banks like Canadian banks. Airlines like Canadian airlines. But somehow, digital companies get treated like magical unicorns outside the laws of gravity? Enough.

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The Fork in the Road

Here’s the choice:

• Own our digital infrastructure and own our future.

• Or stay the digital branch plant of the world—paying rent, following someone else’s laws, and watching our best companies get sold off.

Even the Americans aren’t messing around. They’re throwing TikTok out of the house. Meanwhile, Canada’s still renting the basement from Netflix.

It’s embarrassing. And it’s fixable.

So, no more bad policy. No more wasted years. Canada needs to chase digital sovereignty, build the rules, and put Canadian innovators in a position to win.

Because if we don’t, someone else will. And they’ll be cashing the cheques while we’re left holding the bag.