The Federal government is considering taxing digital e-commerce sales by foreign companies such as Apple, Amazon and Netflix, as Canadian companies want to level the playing field, claiming it’s unfair.
According to The Globe and Mail, Ottawa’s 2014 federal budget sought input from the public to debate whether e-commerce sales to Canadians by foreign-based companies should be taxed, similar to moves made by the EU and in Norway. Should policies change and taxes be required, it would add tens of millions of dollars to federal coffers.
The debate has remained relatively under the radar but now major companies on both sides of Canada and the U.S. are lobbying the Federal government, including the likes of Rogers.
Rogers sent their submission to the Federal government back in June of last year, arguing in favour of collecting sales tax on e-commerce tax by foreign-based vendors, noting:
“We recommend the Canadian government introduce a mandatory registration requirement for foreign-based suppliers of supplies in the digital economy to Canadian residents similar to the approaches taken in other Value Added Tax jurisdictions. In addition, we recommend the Canadian government should amend the rules around agency/billing agency for digital supplies into Canada as a complementary measure to mandatory registration.”
Consumers making digital purchases from foreign based vendors are supposed to ‘self-report’ them and pay HST or GST, but clearly this is not being practiced. This lack of tax creates a price gap on digital goods in the neighbourhood of 5-15%, as companies such as Netflix ($7.99 per month on your credit card for legacy customers) don’t collect tax on monthly subscriptions, but Rogers and their rival shomi service are required to ($8.99+tax).
In Rogers’ submission, they note “the reliance on consumer self-assessment in digital transactions causes revenue loss for the Canadian and provincial governments,” and also the “competitive disadvantage” for Canadian digital companies as they are required to charge GST/HST to customers.
Currently, foreign companies without a physical presence in Canada are not required to collect sales tax on digital sales.
According to the Globe, music or movies purchased from iTunes do not charge tax because Apple USA distributes them to Canada. In contrast, e-books and apps purchased do collect tax, as Apple Canada Inc. was incorporated years later here to process them.
Other companies such as Amazon.com do not collect tax on e-book sales to Canadians. Amazon, along with Netflix and Facebook recently hired lawyers Baker & McKenzie LLP, which last month registered to lobby the federal government on this issue.
The Department of Finance told the Globe and Mail it is looking at a variety of submissions from 16 companies, but only four agreed to make their input available to the public:
“Finance officials are continuing to examine the issue, collecting data and views from international partners, and exploring options. It would be premature to comment on possible revenue gains,”
The Alliance of Canadian Cinema, Television and Radio Artists (ACTRA) argues in their submission if Netflix were to collect tax, it would bring roughly $11.1 million in GST, while the provinces could get $15.6 million in sales tax.
One argument in favour of not enforcing tax collection is the fear some smaller businesses would flat out reject offering sales to a particular country to avoid the hassle of managing taxes.
With a federal election around the corner, the issue of having consumers pay more taxes is something no politician wants to touch with a 10-foot pole.
What do you think? Should Canadians be paying GST/PST/HST on digital sales from companies based outside of Canada?
Thanks Prashanna
Want to see more of our stories on Google?
P.S. Want to keep this site truly independent? Support us by buying us a beer, treating us to a coffee, or shopping through Amazon here. Links in this post are affiliate links, so we earn a tiny commission at no charge to you. Thanks for supporting independent Canadian media!
We pay enough taxes.
We do but why should one service be exempt?
Why shouldn’t they? It’s not like there is any consistency when it comes to government, taxes and the way things are done…. Just think of how good this is for the economy ….$15.6 million in customers hands… To keep the economy going!!! Again… Why shouldn’t they???
Everything is taxed except these digital services. Think of how Health Care or Education or infrastructure could benefit from that money.
Give them more money, and they’ll just find new and creative ways to squander it. It’s the way gov’t operates.
Doesn’t change the fact that it should be taxed.
In theory, communism works.
Your right! We’re better off with the Americans Health Care anyway.
How about we start making better Canadian content first instead of being dependant on tax credits?
So that’s why apps are taxed and music and movies aren’t. I wondered why that was.
Europe just tried this. Apple responded by passing the cost onto the customer by raising prices in the European app store. Rich people and companies aren’t stupid. Since customers elect government, making them one and the same, Apple, Netflix, et al are just deflecting the bullet back the people that fired it. Rogers Shomi, etc don’t care about you, BTW. This is just them using dullard politicos to drive away competition thru legislation, keeping trading share values nice and high. And prices. Do you really think Bell Canada loses sleep that baby mamas can’t get free daycare due to lost tax revenue. Please.
This isn’t a digital specific tax, it’s applying they already existing sales taxes (ie GST/HST). The additional cost to the customer would be minimal at best as all it calls for is some additional accounting.
Minimal…..that’s a good one
The price of free enterprise my friend.
We are given the option of reporting digital purchases to CRA. Guess how many do? Nearly zero. Having choice is free enterprise, not the use of legal enforcement manoeuvering. Force is force, a cage is a cage, no matter how soft the padding is. Taxes are the antithesis to free enterprise. Rogers, Bell, Telus participate in CRONY capitalism via CRTC trickery. Why do you think Verizon and at&t haven’t been able to come up here and mop the floor with the oligarch 3? The reach around relationship between CDN telecom and Ottawa really needs to end. Allow the FREE, UNREGULATED market to determine who flourishes and who flounders. Laws of the universe trump laws of man, no matter how much legal paper slimy govt tries to blind us with.
You don’t follow things closely do you? Ottawa is the last friend of the Big Three Idiots. Who do you think is trying to bring Verizon to Canada? Who tried to sue the federal government because of the whole Verizon thing?
Why should digital services have a pass on collecting GST/HST?
I would love for Verizon to come to Canada but you have to think that they would be close or inline with pricing… Why wouldn’t they be? They’d be here to make money, not friends.
What’s your Rogers employee ID number?
So are you going to provide an actual solution for how we tax every online purchase from every country that a Canadian makes? Or are you one of those “pie in the sky” types who says something should be a certain way but has no valid ideas on how to achieve it?
What solution do you need? Amazon is an Internet based company out of the U.S. and they charge and collect tax.
Agree to disagree
Actually you’re an idoit. Applebee’s been doing this ( charging tax on digital content and apps) for years.
It is beyond me why anyone thinks a service should be tax free. Jesus Christ you’re all dumb.
I will be so upset if this happens! Everyone, contact your MPs now.
This is absolutely ridiculous!
Ridiculous? Why? I love paying 8.99 for Netflix too but why should it be exempt from HST?
Because it opens the door for any other digital platform to suddenly be given additional fee structures. Consider it as old world still trying to profit off of the new world avenues of growth.
Old world governing allowed for a situation like the recession to exist, altering our society.
All goods and services should be subject to the GST/HST … This is not a new tax or a new fee. This is sales tax. Old world, new world? There’s no philosophy here. It’s sales tax.
So they can declare that VPN use to watch what we would really like to in a free country is not allowed and if we want to watch anything on these services at all it will cost even more for the entertainment through tax.
Mixing a structured fee on services that hadn’t even been around for the majority of said services existence doesn’t make sense.
*said fee (tax) existence *
Oh my God! This is about the GST/HST! This is not a conspiracy theory … It’s the sales tax that every other company collects and all Canadian citizens pay!!!
FragilityG4 Jackie Jones 2 hours ago
“The price of free enterprise my friend.”
——————
ulcer….affecting….ulcer….unngghh
You want everything for free.
“just another reason for a corporate identity such as Rogers to alter there own internal pricing “tiers”. ”
Am I missing that you seem to be missing
Your statement makes no sense. This is about HST/GST.
???????????????????? No actually it’s not. ????????????
” as Canadian companies want to level the playing field, claiming it’s unfair. “
Exactly! Canadian companies such as Rogers have to charge and collect GST/HST while others like Netflix don’t! That is what they mean by leveling the playing field!!! It is unfair that Netflix doesn’t have to charge GST/HST as it could be (although it hasn’t) marketed as a cheaper alternative to Shomi …
Shomi is 7.99+HST=9.03
Netflix is 7.99+0=7.99
If they both charge and collect HST the price is identical.
You know take a good look at what Netflix USA has for content, then look at Netflix Canada, then finally look at this beta service Shomi. Shomi is already offering films that are not on either Netflix.
If you think thats all Rogers has in mind consider the last guy who ran the company and how much he took with him during a recession after math for a paycheck when he left.
Now consider how many people have never really had anything great to say about a company like Rogers over the last few years alone.
They think “it’s unfair” and they want “a level playing ground”.
Get the blinders off and realize a corporate identity like Rogers wants what is only going to put the ball in their court.
It’s so unfair that a company like Netflix started in the 90’s and had to climb mountains in order to provide something here that we could have started but never thought about it UNTIL NOW ( Rogers + Shaw ) >
What recently happened, the theater industry put out the dreaded word of fear that maybe they’re time was coming to an end like video stores because Netflix had become so welcomed by so many people everywhere.
Yea you’re right, when it comes to these companies claiming how unfair it is, it’s all about TAX ALONE and nothing else.
Now Raymound run the figures again and tell me that there are 246 toothpicks on the floor…definitely 246.
This discussion is futile. You don’t grasp even the simplest of economics. You’re sitting there trying to create a non existent conspiracy theory. This is just about tax. Nothing more. In other situations yes Rogers and the other Idiot companies are trying to push personal financial agendas and even though this is financial it’s only about tax not raising prices. This is not a president setter in any way; it’s TAX. So please do me a favour, if you want a conspiracy theory call George Norry because this situation is completely black and white.
” as Canadian companies want to level the playing field, claiming it’s unfair. ”
______________________________________________
“just another reason for a corporate identity such as Rogers to alter there own internal pricing “tiers”. ”
______________________________________________
Hey man you made it into much more than it needed to be by not taking the time to carefully read.
You need to run the math fine, run the math but it’s not what was involved with either of the original statements.
The playing field is not level when Shomi charges and collects HST/GST and Netflix does not. I’m not sure I can make it anymore simplistic for you. You are the one who is blowing this up to something more than it is with your wild theories of corporate identities “altering their internal pricing “tiers””. Rogers is asking the federal government to legislate that all companies offering digital services from abroad to charge and collect the same sales tax, HST/GST. THATS IT.
Wow your world is perfect brother.
BTW…few years back there had been a strong need by these same companies to charge a large fee if the newly imposed data caps had been exceeded.
Additionally how is the whole roaming charges situation
going these days, last I heard this iPhone thing was a global phone or something.
Could that be true? ????
Listen carefully … Those points are valid. I agree completely. Having said that THEY HAVE NOTHING TO DO WITH ALL COMPANIES CHARGING AND COLLECTING HST/GST on all goods and services.
The article posted:
” The Federal government is considering taxing digital e-commerce sales by foreign companies such as Apple, Amazon and Netflix, as Canadian companies want to level the playing field, claiming it’s unfair. ”
Last time these companies claimed something was unfair was…….
There claims today of unfairness have suddenly surfaced after THE FILM INDUSTRY PUT OUT A MESSAGE OF POSSIBLY BEING THREATENED BY THE POWER NETFLIX NOW YIELDS.
Just pay more taxes and believe it’s really for the good of your fellow Canadians. Next thing we’ll be hearing all over again about HOW ALL THE JOBS ARE BEING TAKEN AWAY FROM CANDIANS>>>>>>>>>>>>
With all due respect, get some education; then we will talk about this.
Your not open enough to seeing a bigger picture. Don’t worry though one day it might come, until then keep paying those taxes and counting them matches.
Again with the conspiracy theories … Grow up.
You’ll be ok brother, just give it a little more time. Your frustration is understood at this stage in life.
Yeah I remember when I was an ignorant carefree high school student … Enjoy it while it last, brother.
Dont deflect the fact that you missed the initial statements intended to be conveyed and that you would like believe everything involved with corporate identity agendas in a commercial world are to be honest and true.
Now how ’bout that HUG? You could use one.You also argue like an ex wife. ????????????
Your initial statement holds no credence to the topic in hand. You’re creating something out of nothing. You’re too pessimistic for your young age. Stop worrying so much and enjoy semi formal … I’m sure they’ll play you some Bieber and Swift … Better ask that home room girl soon!
You’re right.
” as Canadian companies want to level the playing field, claiming it’s unfair. ”
______________________________________________
“just another reason for a corporate identity such as Rogers to alter there own internal pricing “tiers”. ”
______________________________________________
FragilityG4, just stop it. I feel bad for saying this, but these people are actually Idoits. You’re wasting your breathe trying to explain sales tax, which you would think would be easy to do, but apparently it’s incredibly difficult.
So it Pepsi was subject to HST/GST, but a new soft drink that comes out wasn’t, that would be fair? Making money off canadians but doing nothing to help the country or the ecomomy, everyone would ok with this? If your answer is yes, you’re an idoit.
If your saying that it read as it shouldn’t be taxed you’ve missed the part about how new services should be handle it different ways. I never told the guys it shouldn’t be taxed
point was clear on initial post:
“just another reason for a corporate identity such as Rogers to alter there own internal pricing “tiers”. ”
Put simply there agreement with a implemented tax has way more intention than the singular guise of benefit alone to the country through this additional revenue.
I like you better when you’re bashing Rogers
This isn’t about Rogers as much as it’s about Canadians. I’m sorry if you don’t understand that.
So, do you work for actra or rogers? Either way, why don’t you just make a donation to the government if you feel you don’t pay enough.
When you open the door to more taxes, it doesn’t just end there.
Do you want us to start being taxed for produce and other grocery items? After all, prepared food is taxed, but produce, canned goods aren’t.
This is NOT more taxes!!!!! The GST/HST exists!! But for whatever reason digital services has a pass and it shouldn’t. Would it be fair to pay taxes on GM car but not a BMW just because the BMW is made elsewhere?
I don’t work for any telecom, I’m just a realist. Check my history of comments, not many slam The Big Three Idiot telecoms as much as I do.
LOL, I was thinking the same thing; there’s definitely a vested interest at play here. And I’m not one of those conspiracy theorists who thinks that if someone’s POV aligns with a major corporation’s, they automatically must work for them.
However, as I write this, there are 75 posts on this article, 33 of them by FragilityG4. That kind of obsessive need to defend something as unpalatable as the application of a consumer tax where none exists now, is definitely something more than just an over evolved sense of fairness.
Yup. Good ‘ol FragilityG4, your local iPhoneInCanada nut job commenter at your service.
He’s also the only one making sense. You can argue that Netflix (and ALL digital services) should be taxed like Shomi currently is. Or you can argue that Shomi (and ALL digital services) should be tax-free like Netflix currently is.
But its pretty hard to argue that Shomi should be taxed while Netflix is allowed to operate tax-free. That creates a pretty unbalanced playing field and your personal opinion of either company doesn’t (and shouldn’t) change that fact.
And to make matters worse, its unbalanced in the favor of foreign companies which is generally considered a bad thing (the only reason we accept it in Netflix’ case is because our incumbents are so bloody horrible to us. If Bell, Rogers, etc actually treated their customers decently, there’s no way in hell we’d choose to support a foreign company.. at least most Canadians wouldn’t.)
I’m not saying the argument is without merit, all I was commenting on was the fact that he can’t allow a single comment to the contrary to go unanswered; almost OCD about it.
That said, I think there are legitimate reasons why Netflix is not taxed and domestic services are. Netflix has zero physical presence in Canada, which for decades, has been the standard by which application of tax is determined. Before the introduction of HST, you weren’t charged provincial tax on mail orders if the company you ordered from had no presence in the province. This is, in a sense, a form of that.
He’s not the “only” one making sense. I agree, it’s a valid POV, but it’s not the only one. We’re always bemoaning the fact that we’re so far behind in digital services in Canada. Forcing foreign corporations, who have no presence in the country, to collect and remit Canadian taxes (with all the cost and manpower associated with that) will only serve to further discourage services like Netflix to offer its service in Canada.
OK this makes more sense to me.
Is this the current Rogers president working on his future money bag for when he departs the company?
That makes no sense, this is about HST.
Any other “price change” always seems to be a reason for Rogers to alter there own pricing schemes. (Shomi could suddenly be increased after its been out of beta for a short period.)
This is about HST.
—- the point was anything new externally is just another reason for a corporate identity such as Rogers to alter there own internal pricing “tiers”.
They want a level playing field. Shomi is 8.99+HST. Netflix is 8.99. There’s nothing wrong with them wanting a level playing field especially when it comes to sales tax. Everyone on this board should stop searching for reasons why digital services should be exempt from a goods and services tax. All goods and services should be taxed. This is not a Rogers thing as much as people are making out to be because if it were Netflix lobbying for Rogers to be taxed properly everyone would be on board.
“Level playing field” is a smoke screen for an “open playing field” that if approved would allow them to approach the next corporate step of what they would really like to line there coffers with for these new services.
Just admit to everyone here that you feel you just simply do not pay of enough taxes personally already. It would be ok.
So who else should not have to collect sales tax? Should Canadian Tire collect it because it’s Canadian and Home Depot be exempt because their American?
This is NOT A NEW TAX OR FEE!!!
How could collecting a sales tax help “them approach their next corporate step … ” yaddy yaddy yadda?
I want what you have for a yearly income!????
You’re naive if you believe that my income is the only only reason I support a democratic society. The people that evade paying taxes the most are the ones in the upper echelon of the tax bracket.
” —- the point was anything new externally is just another reason for a corporate identity such as Rogers to alter there own internal pricing “tiers”. “
Your math does not add up. Let me show you:
Shomi 7.99+13%=9.03
Netflix 7.99
Netflix after tax correction 7.99+13%=9.03
So now you’re saying that once Netflix charges the 13% Rogers will make tiers (which Netflix already has 7.99, 8.99 and 10.99) and raise prices pricing them out of competition?
That does not make any sense.
You’re right that doesn’t make any sense at all….
How many matches are there?
” just another reason for a corporate identity such as Rogers to alter there own internal pricing “tiers”. “
I would love for you to explain how Netflix charging HAT/GST would spawn Rogers to “alter their internal pricing tiers”
Where are you pulling this from???
You should re read my original point and the additional one you made to someone else.
—————-
FragilityG4 Jackie Jones 2 hours ago
“The price of free enterprise my friend.”
—————-
Corporate level will use any excuse to raise there own rates, including finding a way to link it to an application of tax implementation. They will just find a way.
So if Netflix starts to charge 13% for HST and bring their price level, Rogers willin turn raise their prices above that of Netflix despite them lobbying for a level playing field when it comes to charging HST? Think about it … Does that make sense?? If they charge the same, why would Rogers raise their price? They’re trying to compete with Netflix so charging more is not competing… That’s counterproductive since Rogers does not have a monopoly/oligopoly when it comes to streaming services.
Stop over thinking about the matches.
See above on the intended point made.
I love your fantasy world — pay taxes on what you want IF you want. How do I get citizenship to this magical land?
Calm down brother your ulcer is affecting my ulcer.
No ulcer here “brother” in fact I’m laughing because the ignorance on this subject is baffling. Commerce is not for all I guess ????
I hate paying taxes, I hate agreeing with Rogers even more, but this makes sense. All goods and services should be subject to sales tax.
Finally, some sense prevails. This isn’t about adding new fees to Netflix that would support
That sucks, Nintendo already does this with Digital sales on the gaming front. Which makes me like PSN more to buy games as they are cheaper then retailers and Tax free.
Its more Rogers whining, “well netflix doesnt have tax how come we have to”.
Why shouldn’t Netflix be subject to HST?
If its just the GST (since some provinces did not convert to the Conservatives HST Single tax) and be exempt from PST i wouldnt mind. Still we are still being over taxed in Canada, in BC there’s already talk of raising taxes for the sake of “transportation improovements” which I wouldnt be surprised if they increase the tax and the Translink Board in BC gives themselves a pay raise for their “transportation improovements”. Its happened before, raise prices, more money for the CEO and their Board of Directors. Heck even Premires and the PM give themselves and their party raises using our Tax dollars instead of trying to improove whats needed.
First off the HST is the creation of the Liberals NOT the Conservatives. The Conservatives actually lowered the GST by two points as promised since assuming office.
Why should this service be exempt from the full HST when NOTHING else is? At one point children’s clothes, hydro, resale house and much more was exempt from the PST but since the LIBERALS brought in the HST everything is subject to the tax. So again why should digital services be exempt?
As for BC’s provincial woes, you guys have the same problem we in Ontario have provincially — the Liberals.
The assumption that if taxes were collected by Netflix, millions of $ would be collected is wrong. Canadians are financially strapped and looking to spend LESS of their hard earned income. I “cut the cable” over a year ago to save money. Netflix isn’t worth to me much more than the $7.99 I’m currently paying. A 13% price increase with no change in the service would have me canceling the service.
I’m not a bottomless well of money…
You can’t afford $1.04 extra pre month?
I am so excited to cancel my ROGERS account today!!!!!!!!!!! It’s going to feel fantastic. I will let them squirm!!!
It’d be nice if ROGERS put some effort into customer experience. Just a little. Oh that’s right, they don’t have to….NO competition.
Strictly speaking, it’s true that implementation of the tax would be the fair thing to do, and would put the Canadian companies on a level ground with the American ones.
But then again, one could ask why my cell phone bill from Rogers is triple what it would be in the US (and that’s only after I convinced them to reduce it!) In fact, I’m currently looking into US based plans with roaming in Canada – it may actually still be cheaper. Last I checked, even Zimbabwe actually had better and more consistent cell coverage for less. I can’t imagine that too many large cities in developed countries have gaps in cell coverage, yet Rogers has long been aware of two along a major highway in a major Canadian centre and does nothing.
Broadband is 5-25x faster in places like Japan and Korea. One Northern European country has declared that the minimum Internet access speed is 2Mbps and it must be unfiltered/unthrottled. Meanwhile, Rogers/Bell/etc try to pass off these speeds as broadband…
I would be much more willing to listen to the whining of the big corporations if they started listening to us.
Suck it, Rogers.
So implement a tax on something that doesn’t exist. .. smart.. everyone already pays tax to their isp to use digital data so sounds like a tax on a tax… . Netflix and digital anything doesn’t exist, it’s just data that is scrambled and assembled buy ur own computer or products, wake up ppl… why should we pay taxes for such a thing? To better the economy? How so buy taking more money from ppl pockets? How about putting more money into ppl pockets!.. that would build a better economy. The government is just money hungry and want to show power.. sorry u don’t own me nor will I pay tax on something that isn’t physically there..
I’ll disagree with FragilityG4 that this isn’t more tax.
Even if you could somehow convince me – and you can’t – that this was simply an unfair exemption of an existing sales tax, that tax is not being applied today. Applying it tomorrow is the definition of implementing a new tax. You simply can’t argue that you won’t be collecting more tax revenue because … math.
More importantly, we’re already paying tax on internet services provided by our ISPs. Why on earth should we pay tax on top of that for streaming services?
And finally for Fragility – you need to keep your politics out of technology discussions. The HST is absolutely the brainchild of the federal Conservatives. Use those already taxed data services to look it up.
So… right now, the apps are charging for the GST… Since I’m living in Manitoba… are they going to add PST in the future?
And people wonder why I pirate digital media.
Clearly FragilityG4 works for the Government in the Tax Field
FragilityG4 is currently using a Rogers leased IP, This could easily be their marketing/pr Department. Unfortunately there’s no way for us to be sure if he’s just a Rogers Internet customer or the Company. Since the company can use any IP in their pool for external communications.
I do not want to pay taxes on taxes. Apple raised Canada’s rate by 15% to cover the values added tax. Ok fine. I’ll pay that 15% recuntantly my issue is the tax Canada then charges on top of that. Where I am it added the VAT PLUS HST equaling 30%. Also HST is charged on Apples NEW VAT pricing platform of 15% increase. This means we are charged HST tax on the VAT tax apple imposed. This is what gets me.
Technically, we’re supposed to be paying these taxes regardless of whether they are charged or not. So the question is, should we be enforcing foreign entities into charging Canadian taxes? I think no. I think the problem will lie with the CRA and I think they have bigger fish to fry over an extra $12 a year in HST for Netflix. As much as it doesn’t create a level playing field, I don’t think the problem lies with Netflix, or Apple. Realistically, it’s like going shopping in the states and not declaring it on your way back in. You can’t force these retailers to charge Canadian taxes. No one will want to do business with any Canadians if that’s what happens.