Facebook to lobby feds on digital services tax after election promises

Facebook Inc. has registered to lobby the federal government on “proposed digital services tax,” according to the lobbyist registry, just weeks after an election campaign that saw all major parties pledge to go after foreign digital companies. The new registration is under Garrick Tiplady, Facebook’s managing director in Canada, and is effective as of Friday, November 15. The development comes following a federal election campaign in which the parties were united on the issue of making foreign digital services -- which historically are not required to pay sales tax at the federal level -- pay taxes. It also comes a week after several United States trade organizations sent a letter to the U.S. government, expressing concern with Liberal government’s pledge to tax foreign digital company sales at a rate of three per cent. The governing Liberals promised during the election campaign that they would impose such a tax if elected, while the Conservatives, NDP, and Green Party also pledged to impose some kind of tax on those foreign companies. Former Heritage Minister Pablo Rodriguez had already said in June that the government would also look to require those foreign companies to promote Canadian content on their platforms, as a government-appointed panel studying the country’s communications laws prepares to release its recommendations in January. The parties’ shared belief in some kind of level playing field could give the Liberals some breathing room to work with others on policy, as the governing party walks into a new session of Parliament with fewer seats compared to its last win. Saskatchewan and Quebec have already gone ahead and imposed a sales tax on Netflix Inc., which would then pass those added costs onto their customers. Earlier this week, Fortune magazine reported that the Organisation for Economic Co-operation and Development (OECD), which is holding consultations on these matters in Paris this week, is expected to have new rules in place by January for the taxation of digital companies. Late last year, the Liberals said they would wait for other OECD countries to establish a digital tax regime before moving on its own. The move to tax the big foreign tech firms is a popular one among a cohort of media companies that derive at least some of their sustenance from digital advertising. Facebook and Alphabet Inc. take up the majority of digital ads, a fact that has elicited complaints from media companies and advocates that the government isn’t doing enough to stem the bleeding. Canada’s auditor general has already said that Canadian companies are “disadvantaged” by foreign companies that are exempt from tax. The social media behemoth, which did not respond to a request for comment, only became a registered lobbyist in the federal government last year, after pressure from Parliamentarians. Before Friday’s lobby registration, the company had already registered to discuss the impact of government legislation on online digital platforms and “broadband connectivity options.” For over a year, the company has been embroiled in a privacy scandal involving data being swiped from its platform without user consent. The new government will also be faced -- as it has before this past election -- with the issue of whether it should amend a provision within the Income Tax Act that allows companies that advertise on foreign digital websites the ability to deduct that spending from taxes. Advocacy group Friends of Canadian Broadcasting has been calling for the government to close that loophole, which they say would repatriate that money and buoy struggling media companies. Facebook’s registration follows Twitter Inc.’s own update to its lobbying files, which now includes the subject matter of the government’s internet advertising policy. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

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Facebook to lobby feds on digital services tax after election promises

News | November 21, 2019

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