Tag Archives: tax

CRTC To Regulate Tech Firms like Facebook and Google in Canada

Canadian government is set to introduce a new law, where it will give special powers to CRTC, Canadian Radio-television and Telecommunications, to regular tech companies in Canada.

Government said that it will provide updates to the new legislation, to give more power to CRTC, which will include letting CRTC issue licences, fine companies that do not comply and force companies to provide commercially sensitive information.

It’s about the future of the entire industry. It’s not about any one particular streamer or studio. That’s why we encourage the government to have as many tools available as possible so that we have flexibility in a new-and-improved Broadcasting Act that can adapt to this fast-changing, dynamic market.

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Reynolds Mastin

President of the Canadian Media Producers Association

The current Broadcasting Act and the Telecommunications Act is outdated the way it is now, as it was written before the internet. Canadian government said that Canadians are afraid that their culture is being threatened by big tech giants like Netflix and Facebook.

Because firms like Facebook and Netflix are digital, they do not require license to operate in Canada, and do not have to play specific percentage of Canadian content to viewers.

letterkenny
This Canadian television sitcom comedy series showcases the antics of the residents of Letterkenny, a small rural community in Canada.

While it is nice to see Canadian government to play active role to ensure that Canadians across this beautiful land can login to stream their shows like Letterkenny and Tout le monde en parle, they have to be careful as well.

It is interesting to see new power to police by CRTC being announced shortly after Google’s announcement of creation of 5,000 new jobs in Canada.

The problem is if Canadian government provides unlimited powers to CRTC and CRTC starts imposing fines left and right, some tech firms might pull their products away from Canada.

This is exactly what happened with political ads few years ago. Canadian government changed the election laws when it comes to advertising. Facebook decided to comply while Google said that it will disallow any politic ads in Canada on its platform.

While Heritage Ministry is giving more powers to CRTC, the Finance Department is set to start requiring foreign tech companies in Canada to collect and remit federal sales taxes. This media tax is already being collected in both Quebec and Saskatchewan.

Liberal government is in its minority right now in the parliament, so it will need another party’s support to pass the laws above. The way it stands right now, both Bloc Quebecois and NDP , are willing to support the Liberals.

Quebec’s Fight Taxing Out of Province Digital Sales

Quebec’s government has decided to start collecting taxes on digital sales, such as Netflix subscription, this year even though company that sells the services or goods does not have physical presence in Canada or Quebec.

Update: Saskatchewan has also recently followed Quebec by collecting taxes on “transmission, broadcast or distribution of data, programming or entertainment” on companies selling into Saskatchewan with no physical presence there.

This new tax has been called “Netflix tax” due to large number of users in Quebec that watch Netflix and now will need to pay this tax in Quebec.

Canadian Prime Minister Justin Trudeau opposed Quebec’s tax enforcement of out of country digital sales saying that Canadians already “pay enough for the internet”.

The Canada Revenue Agency says that only companies with physical presence in Canada are required to register to collect taxes. Many out of Canada tech companies have decided not to collect sales tax from Canadians.

Quebec said it does not need Canada to join in, and it can go it alone by enforcing digital tax collection by itself. It said it plans to collect $30m in additional taxes. It is interesting to see why they are so excited to collect only $30m while their overall tax collection is around $17 billion. Some say this will alienate businesses to do business in the province or sell to users there. Some others say that Netflix , Amazon , etc. users might use addresses in other provinces to save hundreds of dollars a year.

Quebec now needs to account for thousands of companies selling digital goods and services to consumers in Quebec.

Quebec proudly proclaimed on January 9th, 2019 that 75 international companies have registered in Quebec to collect taxes including Google, Amazon, Spotify and Netflix. Facebook told Quebec to wait few more weeks before they can get around to it.

Quebec cautions businesses with no physical presence in the province but selling to consumers there that “the penalties provided for in the existing tax legislation will be imposed on non-resident suppliers that have not complied with the new obligations.”

Quebec’s imposed threshold for sales tax is very low at $30,000 in sales when compared to other jurisdiction. For example Japan requires $120,000+ and over while Switzerland requires $135,000+ to start collecting and ignore everyone else.

Some say that just remitting sales tax on those $30k will be a big headache for businesses everywhere as the accounting services will probably costs more than about $2.9k (0.09975% in Quebec provincial taxes) you will need to collect and remit.

Quebec might need to wait for some international standards to be set or Canada as whole to join in.

New NAFTA increases online shopping duty free for Canadians

After months of negotiations Donald Trump and Justin Trudeau have finally come to an agreement and there is much to be celebrated about this new deal when it comes to Canadian online shopping.

Canadian online shoppers will be pleased that now they will be able to ship more goods into Canada without paying duties as new agreement increased the minimum cross-border purchase price for duties and taxes, known as deminimis threshold. We wrote in an article not so long ago pushing for this change in increase to duties exemptions. I guess Trump and Trudeau have listened to our rumblings.

Canada’s deminimis threshold was $20 since the 80s and have not been updated since. That means that anything you ship into Canada over $20 must incur a duty and a tax unless the product is exempt.

Under the new NAFTA or the new name of NAFTA, USMCA, these thresholds will be increased. Canada has agreed to increase deminimus to $40 for tax purposes (ie GST/HST) and $150 for duty purchases.

Canadian retail was not pleased with the change as they say hundreds and possible thousands of retail jobs will now be lost.

Mexico has also upped its deminimis to $100 US or about $130 Canadian while US has decided to decrease their deminimis from $800 to $100 US.

So Canada has now officially the largest duty free exemption in North America. Sounds like a win for Canadian consumers. Time to load up that www.amazon.com.

Quebec Punishes Netflix Users with Tax

Netflix recently announced that it will be investing around half a billion dollars into Canadian media production. You would think Canada and its provinces would be happy? Turns out not so much for Province of Quebec, mainly French speaking province.

Quebec provincial government has decided that they now need to tax video services across the province even though the service is not taxable federally or in other provinces. Starting 2019 Quebec will require all video services to add QST , provincial service tax, to providers of video like Netflix, Amazon Video, etc.

JoeBreuer / Pixabay

Quebec said it does not matter if a company is based physically in Quebec or Canada, but as soon as it hits $30k in revenues, it will require that service to start adding QST to their pricing schemes or face penalties.

It will be interesting to see how they will try to enforce it when Quebec has no jurisdiction outside its province and Netflix does not have an office or physical presence in Quebec. What happens if Netflix won’t comply?  Will they ask Videotron and other Internet Providers to ban the video streaming websites outright like China does?

Twitter users were not so happy this this announcement:

Why is Quebec so overzealous on collecting taxes no other state or province in North America collects? Simple, even though Quebec is the highest taxed province in North America – it wants to collect even more tax dollar from foreign billion dollar internet companies.

Quebec believes it’s losing out on $226.8 million annually in tax revenues from e-commerce and by taxing media services Quebec says it will add $150m to their tax coffers.

Quebec to Charge Tax on Netflix

Netflix – watch out. Province of Quebec is after you. After Canada announced half a billion of dollar of investments from Netflix – Quebec has decided that is not enough and it needs to act by itself.

Finance Minister Carlo Leitao according to Lapresse said Netflix is a taxable service, and Quebec will ensure to tax it:

“Netflix’s service is taxable and we intend to ensure that consumers pay the tax in the name of [tax] equity”

«Le service qu’offre Netflix est taxable et nous avons l’intention de nous assurer que les consommateurs paient la taxe au nom de l’équité [fiscale]»

All Quebec parties have spoke out against an agreement Netflix reached with federal government just last week where they said they will invest $500 million dollars into Canadian media / film industry.

MichaelGaida / Pixabay

It will be interesting to see how Quebec will receive the tax considering the GST , federal government portion, is not being taxed as Netflix is exempt from paying taxes in Canada due to the recent agreement.

Some users were taken aback by the announcement. In case you do not speak French – here is some rough translations:

Alex Portelance on Twitter:

UBER, Netflix, etc..,  in small Quebec we’d rather protect and consume mediocrity instead of opening our world to the progress and the better!

https://twitter.com/pbergeron01/status/913456835931320320

Yet some other ones supported it calling it simple matter of common sense and equality:

Jean-François Lisée, leader of the Parti Quebecois (PQ), also said that, all producers of media should be charged tax, and that it will take the money to subsidize and reintroduce it back into Quebec society.

Coalition Avenir Québec (CAQ), François Legault, said that he sees a big injustice where rich companies like Netflix can getaway scot-free while local Videotron has to pay millions in taxes.