Sales tax for foreign digital services coming July 1

The federal government plans to begin imposing sales taxes on foreign digital services on July 1, 2021 and to implement a corporate tax for digital companies by 2022, according to its fall economic update released Monday. It said the July 1 timeline “will provide time for the government to consult stakeholders on the proposed changes and for stakeholders to comply with these proposals.” It estimated the GST/HST measure would bring in $1.2 billion in revenues in the next five years. The Liberals promised in the last federal election to extend sales tax to companies like Netflix Inc., who sell services in Canada but don’t have a physical presence in the country. They also pledged in that election to implement a corporate tax on the biggest digital giants, though the government later said it would wait for international consensus on the issue. Now, according to the economic update, it says it won’t wait too long for that consensus to emerge. “Canada has been working with our international partners in a process led by the Organisation for Economic Co-operation and Development with a view to developing a coordinated approach by mid-2021. The government remains committed to a multilateral solution, but is concerned about the delay in arriving at consensus,” it said in the statement. The economic statement said the government would act on implementing a tax on “corporations providing digital services,” that would take effect on Jan. 1, 2022, and “apply until such time as an acceptable common approach comes into effect.” It estimated that measure would bring in $3.4 billion over five years. More details about what that tax would look like will be included in the 2021 budget, the statement said. In the 2019 election campaign the Liberals promised to implement a three per cent tax on the advertising and data revenues of companies with at least $1 billion in global revenue and $40 million in Canadian revenues a year. — Reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

Sales tax for foreign digital services coming July 1

News | November 30, 2020

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Sales tax for foreign digital services coming July 1

News | November 30, 2020

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