Morneau out­lines Canada’s stand on dig­i­tal taxes

The Globe and Mail Metro (Ontario Edition) - - NEWS - BILL CURRY

Fi­nance Min­is­ter says coun­try will wait un­til in­ter­na­tional con­sen­sus is de­ter­mined

Canada is push­ing the G20 to speed up its time­line for set­ting new rules for tax­ing the dig­i­tal econ­omy, but will not take ac­tion be­fore an in­ter­na­tional con­sen­sus emerges.

The Euro­pean Union and Aus­tralia are con­sid­er­ing in­terim mea­sures that would change the tax rules for large dig­i­tal com­pa­nies such as Ama­zon, Google and Face­book, but Canada will not be join­ing those ef­forts.

Fi­nance Min­is­ter Bill Morneau out­lined Canada’s po­si­tion on dig­i­tal taxes on Fri­day dur­ing a phone call with re­porters from Bali, In­done­sia, where he is at­tend­ing meet­ings of the Group of 20, the In­ter­na­tional Mone­tary Fund and the World Bank Group.

Mr. Morneau also said that he dis­cussed U.S. tar­iffs on Cana­dian steel and alu­minum with U.S. Trea­sury Steven Mnuchin while in Bali. The min­is­ter sug­gested a res­o­lu­tion to the dis­pute was not im­mi­nent given that both sides have not reached the stage of de­tailed dis­cus­sions on a so­lu­tion.

For years, G20 lead­ers have promised to take ac­tion on fight- ing tax avoid­ance by large multi­na­tional cor­po­ra­tions with clear stan­dards for tax­ing cor­po­rate prof­its and col­lect­ing sales tax on dig­i­tal sales that cross in­ter­na­tional bor­ders.

The G20 and the Or­gan­i­sa­tion for Eco­nomic Co-op­er­a­tion and De­vel­op­ment have set a 2020 dead­line for set­ting these new rules, and a re­port has been promised for 2019. The EU and Aus­tralia have taken steps to pre­pare in­terim mea­sures, but the United States op­poses such ef­forts.

Mr. Morneau said on Fri­day he would like to see an in­ter­na­tional agree­ment be­fore the 2020 dead­line.

“We’ve been push­ing hard to make sure that re­port is done as rapidly as pos­si­ble,” Mr. Morneau said. “Some coun­tries are con­sid­er­ing mov­ing ahead more rapidly. Our goal is to try and do this in a co-or­di­nated fash­ion with other coun­tries. That, we believe, is the best way to move for­ward.”

The de­bate is fo­cused on whether tax­a­tion should ap­ply in the ju­ris­dic­tion of the cus­tomer or the com­pany, which may not have a phys­i­cal lo­ca­tion in ev­ery coun­try in which it sells dig­i­tal ser­vices.

As of Jan. 1, dif­fer­ent ap­proaches to that ques­tion will ap­ply within Canada’s bor­ders. Que­bec is plan­ning to force on­line ser­vices such as Net­flix and Google to col­lect sales tax from its Que­becbased cus­tomers. Mr. Morneau has not en­dorsed a match­ing na­tional pol­icy, even though the Lib­eral-dom­i­nated House of Com­mons trade com­mit­tee rec­om­mended such a move in April.

The large dig­i­tal multi­na­tion­als also take dif­fer­ent ap­proaches to the is­sue. Some of them have been an­nounc­ing re­vi­sions in light of the con­tin­ued fo­cus on whether they are pay­ing their fair share of taxes.

In Au­gust, Face­book an­nounced that it will start charg­ing sales tax next year on some Cana­dian busi­nesses who buy ad­ver­tis­ing on Face­book and Ins tag ram. The com­pany had pre­vi­ously an­nounced that it is mov­ing to a model of re­port­ing ad­ver­tis­ing rev­enue in each coun­try where the spend­ing oc­curs.

On the is­sue of steel and alu­minum tar­iffs, which were not re­solved as part of the re­cent United States-Mex­ico-Canada Agree­ment on trade, Mr. Morneau said he had a pos­i­tive dis­cus­sion with Mr. M nu chin but that he could not pre­dict when the mat­ter will be re­solved.

“We’re not at a stage where we’re in de­tailed dis­cus­sions on how we can ac­tu­ally get through this,” he said.


Fi­nance Min­is­ter Bill Morneau ar­rives to address the Van­cou­ver Board of Trade in Van­cou­ver on Oct. 2.

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