Canadians Could Soon Be Paying A ‘Netflix’ Tax

Canadians Could Soon Be Paying A ‘Netflix’ Tax
Canadians Could Soon Be Paying A ‘Netflix’ Tax

Canadians could soon be paying a so-called ‘Netflix’ tax on streaming services they purchase from entities outside of Canada, the CBC is reporting.

Netflix is just one example of a foreign digital service provider that is not required to collect federal or provincial sales taxes on monthly subscriptions they sell to Canadian customers.

Meanwhile, Canadian streaming service providers like Bell are required to collect and remit federal and provincial sales taxes on their CraveTV streaming service.

CBC obtained a briefing note for Canadian Heritage Minister Mélanie Joly that raises the possibility that the Federal Liberal government could enforce sales taxes on foreign digital vendors like Netflix.

The briefing note also points to several other countries that have put the wheels in motion to start collecting sales tax from firms such as Amazon, iTunes, Google and Netflix. Last year, Australia introduced legislation imposing the new tax rules. Other examples of countries doing the same include New Zealand, Japan, South Korea and South Africa, according to the note obtained by the CBC.

However, the briefing note also suggests little can be done to enforce the tax regime:

Beyond voluntary compliance, little can be done to enforce a sales tax regime, even when a foreign-based company has registered with the relevant tax authority.

Tax authorities have very little recourse in cases where a foreign-based supplier does not remit any sales tax or where there is a dispute over the amount of tax remitted. They also have a very limited ability to enforce audits beyond their national jurisdiction and to send auditors abroad.

Former PM Stephen Harper Warned of Netflix Tax

During the 2015 federal election campaign, then-prime minister Stephen Harper promised a re-elected Conservative government would not tax or place regulations on services like Netflix. Justin Trudeau’s Liberal government could have other ideas.

Image via Screengrab

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