Finance Minister confirms plans to move forward on taxing digital giants

Even as the U.S. has threatened to retaliate against France for passing a similar bill, Canada wants big tech to pay its fair share.
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Finance Minister Bill Morneau announced at a press conference on Monday that the government will move forward with its plans to tax global digital giants, a move similar to France’s recent tax proposal.

His reiteration of the bill comes even as the U.S. has threatened to impose retaliatory tariffs on France for its proposal. While Prime Minister Justin Trudeau has not named the specific companies that this would apply to, the criteria he outlined during and after his national election campaign would affect digital companies with worldwide revenues of at least CAD$1 billion (US$752 million) and Canadian revenues of more than CAD$40 million. This would result in a 3% digital services tax, applied to both the same of advertising and user data.

Although companies like Netflix and Facebook do not reveal how much revenue comes from their Canadian consumers, many have understood this tax to apply to at least those two companies. In the fiscal year 2018, Facebook took in $58.8 billion worldwide, and Netflix did $16 billion. Estimates from Statista put both companies’ Canadian revenues in the hundreds of millions. Amazon could also be among those in the cross-hairs.

Morneau told reporters the government wants “to make sure digital companies pay their fair share of taxes in our country.” He has said Canada will work with the Organization for Economic Co-operation and Development and other countries as it develops the tax to ensure there are no loopholes. The fiscal update has been promised for before Christmas.

Canadian media companies across the broadcasting and publishing sectors have long called on the government to make moves that would see companies like OTT streamers and social media change the way they do business. Two weeks ago, Corus Entertainment CEO Doug Murphy called on the government to level the playing field for Canadian broadcasters and content creators, saying that OTT streamers are disruptive and that the competition is unfair due to the lack of regulations (including not having to spend set amounts on Canadian content). He also referenced platforms such as Facebook that have become news aggregators, stating, “If you benefit from the system, you should contribute to the system,” he said.

Groups such as News Media Canada and Friends of Canadian Broadcasting have also called for changes to the way foreign-owned digital companies such as Facebook and Google are taxed in Canada.

 

The U.S. has threatened to impose duties of up to 100% on imports of French products such as champagne and handbags in response to the country’s tax, to which both France and the European Union said they were willing to retaliate.

The tax will still require the support of additional parties in order to be passed due to the government’s new minority status.

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