Google to charge new fee on ads in Canada, citing government’s digital services tax

Google has announced plans to charge advertisers a new fee in Canada in response to the federal government’s digital services tax.

Starting in October, the tech giant will impose a 2.5 per cent surcharge on ads displayed in Canada. In a press statement, a Google spokesperson said, “digital service taxes increase the cost of digital advertising,” meaning this surcharge is required to “cover part of the costs associated with complying” with the tax.

In July, the Government of Canada officially enacted its controversial Digital Services Tax (DST), requiring companies that provide digital services to Canadians or sell Canadian data to pay a three percent levy on revenue made from Canadians. The legislation applies to “large businesses” that reach multiple revenue thresholds, which naturally would include a company the size of Google.

Naturally, tech companies have strongly pushed back against the DST. Interactive Advertising Bureau of Canada, a trade group representing Canadian advertisers, has also warned that other companies will follow Google’s lead. “This will increase the cost of running ads on Google and will likely spur similar action on the part of other platforms if they decide to follow suit,” wrote the group on its website. Even the U.S. government has previously pledged to “do what’s necessary” to block it.

The Canadian government, for its part, argues that corporations should “pay their fair share of tax on the money they earn by doing business in Canada.” Deputy Prime Minister and Finance Minister of Canada Chrystia Freeland also said that other countries, like the U.K., Spain, Italy and France, have their own versions of the DST in place but haven’t faced retaliation from the U.S.

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Source: The Canadian Press