Morneau Says Canada Will Study Issue of Taxing Technology Giants

(Bloomberg) -- Finance Minister Bill Morneau said Canada recognizes the potential disruption major technology companies can have on government revenue and will study whether a new tax regime is required for the industry.

Digital taxation could impact companies such as Inc., Google parent Alphabet Inc., Apple Inc. and Neftlix Inc., and was discussed at the Group of 20 meeting in Buenos Aires this week as the European Union considers imposing a levy on online companies. Treasury Secretary Steven Mnuchin said last week the Trump administration “firmly opposes” the measure.

“We are looking at it carefully because we need to understand what if anything happens to our tax base based on a changing of the economy towards a different business model,” Morneau said in an interview at the G-20 meeting Tuesday. We are “studying the issue with an intent to have a point of view.”

Under the European Union proposal, the tax would focus on where tech users are based, rather than where a company chooses to place its European headquarters. “We’re addressing issues like how the international community is going to think about digital taxation,” Morneau said.

Prime Minister Justin Trudeau’s government has in the past rejected the idea of taxing Netflix, a political contentious move. In September, the government pledged not to tax television-streaming services after receiving a commitment from Netflix to create a Canadian division and invest in the country.

Morneau didn’t comment specifically on Netflix.

“We are not studying the issue as an exercise but one that recognizes this presents real differences to how people might be organizing their business over time and where they might be getting profits versus where they might be generating value,” the finance minister said.

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