Not if they're a US entity and its not physical content.
Steam sells games to Canada tax-free.
Nothing about netflix's model says they must have a shop in Canada, therefore they are exempt from tax laws because they have no presence here.
They're simply a US company with licenses to provide content to Canada, just like steam.
Wrong. Legally any sale of classified taxable goods in Canada is to be taxed. Movie rentals fall under entertainment category and must be taxed. If you purchase from a company outside of Canada it's your duty to file and pay the GST/PST or HST on it. Since Netflix is a big company just like Sears and Walmart (who are also American), they must charge taxes if they are doing business here in Canada.
Gas stations incorporate the sales tax in with the gas total. Netflix Canada is likely doing this too. If they are not, this $7.99 price won't last long once CRA gets wind of it. In the news recently CRA went after people running stores through eBay to force them to charge tax.
GST has a $30,000 annual exemption. So if you do less than $30,000/yr in gross sales and services, collecting GST is not required. In Ontario, since HST was introduced, there is no exemption. In theory, the province or feds could go after anyone who sells anything on eBay, Kijiji or even at yard sales.
If Netflix has any kind of Canadian presence, such as an business office or even a Canadian based web server, GST and HST (where applicable) collection are mandatory. PST is also mandatory for the province where they are located. Netflix can get around that by doing everything from the US but they sure won't earn any points with the Canadian government if they want to be treated equally under Canadian law. For example, if Netflix wants standing at a CRTC hearing regarding ISP throttling or caps on their content, they will probably lose due to the fact that they don't 'do business' in Canada. OTOH, if Netflix sets up a Canadian office, collects and pay Canadian taxes plus follows any applicable CTRC regulations and guidelines, they might be able to get some leverage against BDUs that restrict their content.
Maybe Netflix has no knowledge of our tax laws (you never know). Either way, I'm sure someone from CRA is looking at this thread and things will change (they always do when death and taxes are involved).
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