There has been mounting concern over the past few years over whether some of the world’s largest companies – primarily big tech – pay their fair share of taxes. This issue has arisen in countries around the world leading to new digital services taxes that primarily target the U.S. tech giants and which in turn often leads to the U.S. threatening to retaliate in response. Canada now finds itself embroiled in these battles as Finance Minister Chrystia Freeland has proposed a retroactive digital services tax to take effect in 2024 if by that time a newly reached OECD agreement has not taken effect. Professor Reuven Avi-Yonah is a law professor at the University of Michigan and director of the school’s international tax LLM program. He joins the Law Bytes podcast to discuss digital services taxes, the OECD deal, and what might happen if the international agreement falls apart.
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The Law Bytes Podcast, Episode 115: Reuven Avi-Yonah on the Past, Present and Future of Digital Services Taxes
Digital tax policy has emerged as major issue around the world. Canada is no exception. Late last year, the Canadian government announced plans to act on all three fronts: Bill C-10 seeks to address mandated Cancon payment and Finance Minster Chrystia Freeland has promised digital sales taxes by July and what sounds like a digital services tax in 2022.
What is a DST and how might Canada’s digital tax plans play out on the international front? I spoke with Georgetown University professor Itai Grinberg, a leading expert on cross-border taxation and digital tax issues on December 15, 2020, shortly after the government’s announcement. He joined the Law Bytes podcast to talk about the longstanding approach to multi-national tax policy and the emerging challenges that come from the digital economy.
The Broadcasting Act Blunder, Day 9: Why Use Cross-Subsidies When the Government is Rolling Out Tech Tax Policies?
The Broadcasting Act blunder series continues with a slight tangent to consider the implications of yesterday’s Government of Canada Fiscal Update for the claim that reforms are needed to ensure that foreign Internet companies make appropriate contributions to the Canadian market. Canadian Heritage Minister Steven Guilbeault emphasized the issue when discussing Bill C-10 in the House of Commons, talking about payments being a “matter of fairness” and concerns that foreign Internet streamers “make money off the system with no obligation to give back.”
Finance Minister Chrystia Freeland yesterday outlined the better way to ensure equality of treatment and payments into Canada, namely tax policy.
Canadian media organizations face difficult challenges in an age of virtually unlimited Internet competition, a dramatic shift toward digital advertising, and an unprecedented global economic and health crisis. That has led media groups to urge the federal government to “take on” Google and Facebook by requiring them to fund local media. Prime Minister Justin Trudeau has thus far declined to do so. That may spark criticism in some quarters but claims that government-mandated payments from Internet companies will solve the sector’s ills are unconvincing.
My Financial Post op-ed notes that everyone agrees the media sector is more competitive than ever. News organizations such as the New York Times and Washington Post, digital media companies like The Athletic and The Logic, podcasters competing with mainstream media audio offerings and the CBC’s continued digital expansion all offer compelling and competitive news alternatives. This breadth of choice for Canadian news consumers isn’t the fault of Google or Facebook. It is a reflection of low barriers to market entry and a proliferation of services that often do a better job than many established media companies of serving specialized content.
In the months before the coronavirus outbreak, numerous governments around the world enthusiastically jumped on the “regulate tech” train. Digital tax proposals, content regulation requirements, national digital spending mandates, as well as new privacy and data governance rules were viewed by many as essential to respond to the increasing power and influence of digital giants such as Google, Facebook, Netflix, and Amazon.
My Globe and Mail op-ed notes the pandemic has not only sparked a massive shift in economic and health policy priorities, but it is also likely to reorient our views of the tech sector. Companies that only months ago were regarded as a threat are now integral to the delivery of medical equipment, critical to the continuing function of workplaces in a work-from-home world, and the platforms for online education for millions of students. Billions of people rely on the sector for entertainment, communication with friends and family, and as the gateway to health information.