20 October, 2016
Canada is a cash cow for Facebook CEO Mark Zuckerberg who is estimated to be worth $51 billion. Yet his company pays less tax than the average Facebook user.
Facebook Canada's core business model is straightforward: generate revenue from targeted ads, which are customized from data mined from its users' social interactions. More than 14 million Canadians log in to their accounts every day.
Last year, Facebook's Canadian revenues were hoovered into the multinational's $19 Billion global revenues. And thanks to the Canadian government looking the other way, it didn't pay corporate or value added taxes here.
"It defies logic that the Canada Revenue Agency exempts Facebook and other e-commerce multinationals such as Google and Netflix from paying taxes in Canada saying that they have no physical presence and therefore are deemed not to be 'carrying on business' in Canada," says Dennis Howlett, executive director of Canadians for Tax Fairness. "Facebook made $3 billion in global profits last year. They do the same tax dodge in every country. But many other countries are taking action and making them pay taxes on the sales and profits they generate in their country. What more does the Prime Minister need to know before he tightens the rules here so that sales and profits made in Canada are taxed in Canada?"
Howlett points out that the Canadian government's failure to keep pace with e-commerce has created an unfair playing field for Canadian-based businesses required to charge HST/GST on their advertising sales and who have to pay taxes on their corporate earnings.
A recent report revealed that Facebook and Google jointly capture 64 per cent of all internet advertising dollars spent in Canada – over $2.4 billion. When those profits are untaxed it gives them a huge advantage over already struggling broadcasters and newspapers.
"What's the excuse for this misguided loophole that negatively affects Canadian jobs, culture and government revenue?" asks Howlett.
The OECD is recommending that governments tax e-commerce companies. The European Union, New Zealand, Australia, Norway, South Korea, Japan, Switzerland, and South Africa, have modernized tax laws to ensure digital companies pay value added taxes and corporate income taxes on the profits they generate in their country. It's time Canada modernized its tax rules for e-commerce multinationals and leveled the playing field for Canadian businesses who pay their taxes.
Editor's Note: The Prime Minister may ignore this tax dodging fiasco - but YOU CAN do something. SEND THIS MESSAGE to Ottawa demanding that profits made in Canada are taxed in Canada.