Starting July 1, foreign-based digital services like Netflix and Spotify will be forced to charge GST/HST, while a corporate level tax on digital companies operating in Canada is promised to take effect, starting in 2022.
Announced in Monday’s fall economic statement, the federal government says the changes are proposed “to level the playing field by ensuring that the GST/HST applies to all goods and services consumed in Canada, regardless of how they are supplied, or who supplies them. At the same time, the government will continue to work with the international community, provinces and stakeholders to ensure that the sales tax system is fair and provides a level playing field for Canadian and foreign-based businesses.”
GST/HST would also be applied to digital products purchased through digital marketplace platforms, like app stores, under “a special simplified regime” for foreign vendors, according to the document. The government estimates the move will bring in $1.2 billion over five years, starting in 2021-22.
Effective Jan. 1, 2022, it’s also proposing to implement a tax on corporations providing digital services, which would apply until such time as international consensus is reached as led by the Organisation for Economic Co-operation and Development. It’s estimated the measure would increase federal revenues by $3.4 billion over five years, starting in 2021-22. Further details are promised in Budget 2021.
Part II fees waived
The government has also indicated it will provide additional COVID-19 relief to local television and radio stations by waiving Part II licence fees in 2020-21.
“Waiving these fees will provide up to $50 million in relief to these companies, helping them to stay afloat and maintain their broadcasting offerings to Canadians,” stated the document.
With Part I fees waived in March, the Canadian Association of Broadcasters (CAB) had been advocating to have the much more onerous Part II Fees, due Dec. 1, also waived.
CAB President Kevin Desjardins said the organization was “very pleased” with the government decision.
“Given the profound structural challenges faced by the sector, and the economic impact of COVID-19 on their businesses, this waiver will allow many private broadcasters to persevere through the tough year ahead,” said Desjardins, in an email to Broadcast Dialogue.
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