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

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

The Nisga’a Valley Health Authority reported an isolated cluster of COVID-19 cases among non-direct care staff at the New Aiyansh Health Centre. (Gary Fiegehen/Nisga’a Lisims Government)
New Aiyansh Health Centre experiencing COVID-19 cluster among non-direct care staff

Nisga’a Valley Health Authority asking residents to cancel appointments outside the Nass Valley

A photo of the CervixCheck at-home test kit, developed by Eve Medical. (Submitted Photo/Katina Pollard, Métis Nation British Columbia)
Pilot project puts cancer screening into the hands of northwest B.C. women

Métis women experience barriers to cervical cancer screening

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.

The Nisga’a Lisims Government has extended its state of local emergency. (File photo)
Nisga’a state of local emergency extended, vaccines delayed

There are 21 active COVID-19 cases in the Nisga’a Valley Health Authority

Thursday, Jan. 28, 2021 is International Lego Day. (Jenna Hauck/ Chilliwack Progress)
Unofficial holidays: Here’s what people are celebrating for the week of Jan. 24 to 30

Lego Day, Talk Like a Grizzled Prospector Day and Puzzle Day are all coming up this week

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

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

Kimberly Proctor, 18, was murdered in 2010. Her family has spent many of the years since pushing for a law in her honour, that they say would help to prevent similar tragedies. (Courtesy of Jo-Anne Landolt)
Proposed law honouring murdered B.C. teen at a standstill, lacks government support

Ministry of Mental Health and Addictions has concerns with involuntary detainment portion of act

Chief Public Health Officer Theresa Tam speaks during a daily briefing in Ottawa. (THE CANADIAN PRESS/Adrian Wyld)
31 cases of COVID-19 variants detected in Canada: Health officials

Dr. Theresa Tam made announces 13 more variant COVID-19 cases in Canada

Daily COVID-19 cases reported to each B.C. health region, to Jan. 20, 2021. Island Health in blue, Northern Health green, Interior Health orange, Vancouver Coastal in red and Fraser Health in purple. (B.C. Centre for Disease Control)
B.C.’s COVID-19 infection rate stays stable with 508 cases Friday

Vaccine delivered to more than 110,000 high-risk people

Most Read