Facebook to start collecting sales tax in Canada

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Facebook will soon start collecting sales tax on local advertising sales it completes in Canada.

The move is part of a global initiative Facebook announced late last year. By mid-2019, the social media giant plans to collect and remit taxes in every country in which it maintains a local presence. The initiative also includes subsidiary Instagram.

To date, major multinational tech companies, including the likes of Spotify, Google and Netflix, have not collected sales taxes in Canada, despite the fact that some of them operate local offices in the country. That fact has caused significant friction between the federal government, local tech companies and provincial governments.

Quebec, in particular, has been vocal on where it stands on the so-called ‘Netflix tax,’ stating that the province will impose a sales tax on the streaming service. Facebook’s new practice is likely to add fuel to the debate, even if the company wasn’t specifically reacting to pressure from governments in Canada.

“We believe that moving to a local selling structure will provide more transparency to government and policy makers around the world who have called for greater visibility over the revenue associated with locally supported sales in their countries,” wrote Dave Wehner, Facebook’s chief financial officer, in a blog post the company published on December 12th, 2017.

Facebook employs approximately 100 employees in offices in Montreal, Toronto, Ottawa and Vancouver. According to The Logic, the majority of Facebook Canada’s employees are involved in sales, helping to secure lucrative advertising deals with major brands that operate in the country.

For the time being, Facebook does not plan to collect and remit taxes for online purchases.

Source: The Logic