A logo for Netflix on a remote control is seen in Portland, Ore.,Aug. 13, 2020. Experts in taxation and media say a plan announced Monday by the government will ultimately add to the cost of digital services and goods sold by foreign companies. THE CANADIAN PRESS/AP-Jenny Kane

A logo for Netflix on a remote control is seen in Portland, Ore.,Aug. 13, 2020. Experts in taxation and media say a plan announced Monday by the government will ultimately add to the cost of digital services and goods sold by foreign companies. THE CANADIAN PRESS/AP-Jenny Kane

‘Netflix tax’ for digital media likely to raise prices for consumers, experts say

The government says Canadian companies already collect those taxes when they make digital sales

The cost of digital services and goods sold by foreign companies like Netflix will go up under a taxation plan the government wants to put in place next year, experts said Tuesday.

Ottawa said in its fiscal update released Monday it will require multinationals to collect GST or HST on digital products and services, which it said would add up to $1.2 billion over five years.

Sometimes labelled a “Netflix tax,” the measure would also apply to other services such as Amazon.com Inc.’s Prime Video or the Spotify audio streaming service, as well as digital products such as software applications.

The government says Canadian companies already collect those taxes when they make digital sales, so it’s only fair that foreign multinationals should do the same.

KPMG tax partner Joe Micallef said it’s likely Canadians will end up paying the taxes collected for the government by foreign multinationals.

“Right now, the way in which they’re delivering their services, they’re not responsible for the collection,” Micallef said.

“And so, effectively, it would mean that these charges would be appearing on (their) invoices.”

A regular monthly subscription for a streaming service that delivers video or music would be a simple calculation, with the tax rate applied to the purchase price.

But Micallef said it is be more difficult to estimate how much additional tax individual consumers, or businesses, will pay for other types of digital purchases, he said.

Something like gaming software might cost little or nothing itself, but offer the option for subsequent charges to add features that make the experience better.

“How many times? How many transactions? It adds up,” Micallef said.

Dwayne Winseck, a media industry researcher at Carleton University in Ottawa, also expects companies will add the price of the tax to the total sale price.

“I mean, this is really not a very substantial amount, when we’re talking about corporate finances,” said Winseck, who is a professor of journalism and communication.

He said that the term “Netflix tax” has become highly politicized and is often used as “code” for levelling the playing field between U.S.-based digital media companies and traditional Canadian broadcasters.

“And if the idea is to create a level playing field between those two services, then that by all means that makes great sense,” Winseck said.0

David Paddon, The Canadian Press

Like us on Facebook and follow us on Twitter.

Want to support local journalism? Make a donation here.

federal government

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

A health-care worker prepares a dose of the Pfizer-BioNTech COVID-19 vaccine at a UHN COVID-19 vaccine clinic January 7, 2021. THE CANADIAN PRESS/Nathan Denette
Employers might be able to require COVID-19 vaccination from employees: B.C. lawyer

‘An employer must make the case’ using expert science, explains lawyer David Mardiros

The COVID-19 outbreak at the two Coastal GasLink workforce lodges has officially been declared over. (Lakes District News file photo)
COVID-19 outbreak at Coastal GasLink worksites declared over

In total, 56 cases were associated with the outbreak in the Burns Lake and Nechako LHAs

Toronto-based director Michelle Latimer was recently scrutinized after years of claiming she was of Algonquin and Metis descent. (CANADIAN PRESS/Chris Young)
Haida activist calls for hefty fines, jail time against those who claim to be Indigenous

Filmmaker Tamara Bell proposing the Indigenous Identity Act – to dissuade ‘Indigenous identity theft’

Brett Alexander Jones is wanted on several warrants province-wide, in connection with multiple charges. Jan. 21, 2021. Kitimat RCMP photo
Kitimat RCMP searching for man wanted on several warrants province-wide

Jones is described as a five-foot 10-inches Caucasian man, with blond hair and blue eyes.

Terrance Josephson of the Princeton Posse, at left, and Tyson Conroy of the Summerland Steam clash during a Junior B hockey game at the Summerland Arena in the early spring of 2020. (John Arendt - Summerland Review)
QUIZ: How much do you know about hockey?

Test your knowledge of Canada’s national winter sport

An Uber driver’s vehicle is seen after the company launched service, in Vancouver, Friday, Jan. 24, 2020. Several taxi companies have lost a court bid to run Uber and Lyft off the road in British Columbia. THE CANADIAN PRESS/Darryl Dyck
Taxi companies lose court bid to quash Uber, Lyft approvals in British Columbia

Uber said in a statement that the ruling of the justice is clear and speaks for itself

A 75-year-old aircraft has been languishing in a parking lot on the campus of the University of the Fraser Valley, but will soon be moved to the B.C. Aviation Museum. (Paul Henderson/ Chilliwack Progress)
Vintage military aircraft moving from Chilliwack to new home at B.C. Aviation Museum

The challenging move to Vancouver Island will be documented by Discovery Channel film crews

A video posted to social media by Chilliwack resident Rob Iezzi shows a teenager getting kicked in the face after being approached by three suspects on Friday, Jan. 22, 2021. (YouTube/Rob i)
VIDEO: Security cameras capture ‘just one more assault’ near B.C. high school

Third high-school related assault captured by Chilliwack resident’s cameras since beginning of 2021

FILE - In this Feb. 14, 2017, file photo, Oklahoma State Rep. Justin Humphrey prepares to speak at the State Capitol in Oklahoma City. A mythical, ape-like creature that has captured the imagination of adventurers for decades has now become the target of Rep. Justin Humphrey. Humphrey, a Republican House member has introduced a bill that would create a Bigfoot hunting season, He says issuing a state hunting license and tag could help boost tourism. (Steve Gooch/The Oklahoman via AP, File)
Oklahoma lawmaker proposes ‘Bigfoot’ hunting season

A Republican House member has introduced a bill that would create a Bigfoot hunting season

Economic Development and Official Languages Minister Melanie Joly responds to a question in the House of Commons Monday November 23, 2020 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Federal minister touts need for new B.C. economic development agency

Last December’s federal economic update promised a stimulus package of about $100 billion this year

Join Black Press Media and Do Some Good
Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

FILE - In this Nov. 20, 2017, file photo, Larry King attends the 45th International Emmy Awards at the New York Hilton, in New York. Former CNN talk show host King has been hospitalized with COVID-19 for more than a week, the news channel reported Saturday, Jan. 2, 2021. CNN reported the 87-year-old King contracted the coronavirus and was undergoing treatment at Cedars-Sinai Medical Center in Los Angeles. (Photo by Andy Kropa/Invision/AP, File)
Larry King, broadcasting giant for half-century, dies at 87

King conducted an estimated 50,000 on-air interviews

BC Coroners Service is currently investigating a death at Canoe Cove Marina and Boatyard in North Saanich. (Black Press Media File)
Drowning death in North Saanich likely B.C.’s first in for 2021

Investigation into suspected drowning Monday night continues

Most Read