Should profits made in Canada be taxed in Canada?

CEOs at Google, Netflix, Facebook, AirBnB, Uber and other e-commerce multinationals don’t seem to think so. 

And sadly, neither does our own government. The Canada Revenue Agency has given these multinational e-commerce companies an exemption from having to pay any HST/GST or corporate income taxes. 

“Our politicians tell us that we can’t afford national pharmacare, or free university and college tuition at the same time they give tax-free status to these multinational e-commerce companies that are some of the largest and most profitable companies in the world,” says Dennis Howlett, executive director of Canadians for Tax Fairness.

Here’s how this multi-million-dollar tax dodge plays out:

The Canada Revenue Agency has exempted these companies from paying taxes on the basis of the outrageous logic that because they have no physical presence in Canada they aren’t “carrying on business” in Canada. This old fashioned thinking betrays a troubling lack of understanding of the new economy.

Together, Google and Facebook capture 64% of all internet advertising dollars spent in Canada – over $2.4 billion. Online advertising is burgeoning while broadcasting and

"Canadian companies, who have to charge HST/GST on their sales of advertising and pay corporate income taxes, are at a huge disadvantage," says Howlett. This is one of the reasons they are bleeding jobs.”

Multi-millions in tax revenues are also lost  -  because the government refuses to modernize its tax rules.

“It is time for Canada to get rid of this outrageous loophole and level the playing field by making e-commerce companies pay taxes,” he says. 

The Level the Digital Playing Field campaign targets the most profitable e-commerce multinational companies on the planet – including Google, Facebook, Netflix, Uber and Airbnb – that don't pay their fair share of taxes. But the ultimate responsibility is with our Prime Minister, Finance Minister and Revenue Minister to modernize the tax rules so that e-commerce players are taxed on profits made in Canada. That’s why Howlett is asking Canadians to send this message to Ottawa demanding a change in the rules.

And he is asking for donations to boost this campaign

Canadians for Tax Fairness will be using the same successful campaign formula that blew the cover off Canada’s tax haven problem and forced the government to invest $444 million in an offshore investigative unit at the Canada Revenue Agency. Here’s our strategy:

  1. Solid research
  2. A robust media strategy
  3. Public education and engaging supporters in taking action
  4. Persistent advocacy with lawmakers and policy makers
  5. Collaboration with global partners in the fight for tax justice.

"Your support for this campaign will help raise tax revenue to pay for things that matter to all of us," says Howlett.  "It will also help level the playing field for Canadian businesses that are paying their fair share of taxes and save Canadian jobs."

You’ve likely heard about the European Union’s decision to tackle Apple’s tax scheme using Ireland as a foil. That’s just the beginning. Other countries, including the European Union, New Zealand, Australia, Norway, South Korea, Japan, Switzerland, and South Africa have started to take on global e-commerce by requiring them to pay corporate and value-added taxes on the profits they generate in their country.  But Canada has yet to catch up. 

We need your help. Please make a donation to Canadians for Tax Fairness to support the Level the Playing Field campaign and help us get the message out.

Want to know more? This factsheet has some great information about the e-commerce tax loophole. And here is an opinion piece that was published in Huffington Post.