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Netflix is ​​exempt from the new digital services tax

Netflix is ​​exempt from the new digital services tax

The description of the implementation of the 3% tax, which will come into effect on January 1, 2022, is included at the end of the budget, starting on page 833. According to the plans of the federal government, this includes that the scope will be limited to revenue generated from online marketplaces, social media, ads, and data. the user. The target companies must have a total income of at least 750 million Euros (1.1 billion Canadian dollars).

Thus, we can conclude that the tax is targeting digital giants like Google, Amazon and Facebook. Ottawa, for example, will collect the tax on revenue from ads shown on the YouTube video streaming service (owned by Google), but not on subscriptions to the platform. The same goes for Netflix, which surpassed 200 million subscribers in 2020, especially thanks to the closures.

In the same year, the California-based company reported profits of $ 2.8 billion and revenues of $ 25 billion, including $ 11.5 billion in the United States and Canada. The U.S. Institute of Taxation and Economic Policy calculates that the company paid a tax rate of less than 1%, or $ 24 million, on its income earned on U.S. soil. It’s impossible to know what tax is paid in Canada, except that the country accounts for 10% of its North American activities Data released in 2019.

Tax Netflix

The government says its budget The obligation to ensure that companies in all sectors, including digital companies, pay their fair share of the money they earn doing business in Canada.

In the office of the chancellor of the exchequer, Chrystia Freeland, her press secretary, Katherine Koblenskas, says that a company that distributes digital content and generates revenue from direct user fees will be subject to another tax, namely: Goods and Services Tax / HST for foreign suppliers who sell digital products or services.

However, this measure in place from July will be invoiced to consumers instead. Also known as Netflix, Was part of the Liberal Party’s commitments during the last election. During his previous tenure, the Trudeau government refused to impose it for Don’t raise taxes for the middle class Has led to Long debate.

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It’s scandalous

In the New Democratic Party, deputy leader Alexandre Puliris has since rejected this argument Netflix costs nothing. In the eyes of liberals, he says, Netflix’s subscriptions aren’t enough to justify these people paying their taxes on the income they earn here in Canada. It’s scandalous. It is a weight, two scales.

When liberals tell us that the web giants have to pay their taxes, they assert that not all web giants will be. Netflix won’t be there.

Quote from:Alexander Bulleris, deputy leader of the New Democratic Party of Canada

Canadians’ director of tax justice, Tony Sanger, says he doesn’t understand this refusal to tax direct taxes on Canadian subscription fee revenue for streaming services.

He says Netflix is ​​making a lot of money and undermining the local cultural and media industries. It is important to impose fair taxes not only on sales of services, but also on company income.

The digital services tax will generate $ 3.4 billion in revenue over five years. It will be the subject of a consultation in the coming months, after which a bill is expected. The measure is likely to be temporary, while members of the Organization for Economic Cooperation and Development (OECD) reach a multilateral agreement.