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

TORONTO — Experts in taxation and media say a plan to make taxable the digital services sold by foreign companies such as Netflix Inc. will ultimately add to the cost consumers pay for those services. 

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

Sometimes labelled a “Netflix tax,” the measure would 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 says the plan may be fair but it’s likely Canadians will end up paying the taxes collected for the government by foreign multinationals.

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

This report by The Canadian Press was first published Dec. 1, 2020.

The Canadian Press