Why Canada has a new tax for Internet companies

Large IT corporations like Google, Facebook, Netflix and Spotify plan to pay it.

/ Unsplash / Stellrweb

What happened

The Government of Canada supports news media in the country, funding them regularly. However, some believe that such activities burden the state budget too much.

To rectify the situation, a number of politicians – including Minister of Cultural Heritage Canada Steven Guilbeault – offers introduce a new “link tax”. His idea is for Internet companies to pay authors (news portals and magazines) a license fee for the content they use – for example, when parts of published news get into a search engine.

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Politicians also propose introducing a tax on income from digital sales of foreign companies operating in the country. The task is to support “local producers”, that is, Canadian companies competing with foreign giants.


Officially, the bill is not yet ready – they plan to present the final version in the fall – however, it has already been criticized. First of all, the state commission spoke out against the adoption of the law, which conducted a preliminary analysis. Experts noted that international practice related to the “link tax” is not doing its best.

Spain is an example, where a similar law was approved in 2014. Then google just disconnected Google News service in the country, and traffic on Spanish news sites fell on 10%. The introduction of a similar tax can lead to similar consequences.

/ Unsplash / The new york public library

Residents of Hacker News in a thematic thread say that a new tax could cause a rise in the price of digital services for Canadians, as IT companies will try to compensate for the losses. In the worst case, they simply stop providing their services.

Not the first time

This is not the first time that Canada has proposed an Internet tax. In 2018 was considered option with the “streaming tax”, but then it was offered to be taken not from IT companies, but from users who spend more than 15 GB of traffic per month. Initiated by Television Composers Guild of Canada, the collected money was offered to be transferred to the authors of soundtracks, which receive less Royalty from streaming services like YouTube, Netflix or Amazon.

The document was criticized, at least because it disadvantaged users of streaming platforms and gamers. The former will be forced to pay for music and films three times – for a subscription, for traffic and for accessing the Internet to their provider. The latter will generally pay tax just because they download games whose weight can exceed 50 GB.

The fate of this project is in limbo, and the likelihood of its adoption remains small. How the situation around the “link tax” will unfold remains to be seen.

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