I remember our Canadian Finances Minister talking about adding this DST (Digital Services Tax) since it was announced back in April 2021. Now it's the end of June, heading into July and it's going to be in affect quite soon. I'm over here wondering what this means for Canadian consumers purchasing stuff through online storefronts like GOG, Steam and legit key seller sites (i.e. Fanatical, GreenManGaming, Humble, etc). I understand that countries outside of Canada & USA have no regional pricing on top of all this so I wonder if this is really going to hurt canadian shoppers when they purchase stuff online besides our GST / HST that's added on top.

https://www.canada.ca/en/department-finance/programs/consultations/2021/digital-services-tax-consultation.html
https://www.rktaxlaw.com/the-canada-digital-services-tax/

Love to know what others think about all of this. Hope everyone has a wonderful wednesday.

Involuntary taxation is theft, and this is just another example of said theft.

Lol, judging by those numbers it looks like gog won't have to worry about paying taxes to Canada any time soon. xD

Also, obligatory.

Not a tax accountant or lawyer, but 3% DST shouldn't be accounted due to it applying to $1.125B CAD global revenue or $20M CAD from Canadians based on your 2nd link. GOG made $112M CAD in global revenue last year and $4.48M CAD from Canada (4% global revenue). So we can remove that from the equation.

However, charging GST/HST is a different issue and is applicable here since they make > $30k CAD/year. Since GOG makes 6% net profit, then they'd lose profit doing business with a majority of Canadians living outside Alberta and the Territories if they kept the prices the same.

If we go by conservative estimates and assume all Canadians were paying 15% HST (-9%) and Canadian revenue stays constant, then they'd have to find a way to make up the $672k in taxes plus the $269k to sustain the same net profit from Canadians last year. Therefore, $0.941M in shortfall or to increase their global revenue by $15.7M for makeup. So if my math is correct, they'd need a total of $127.7M CAD in global revenue (+14% y/y) either by linearly increasing the customer base by that much or a price increase on all games by 14% (to a net profit margin of 6.84%) going forward to make up for Canada's slack and make the same profit as last year.

The most fair solution would probably be regional pricing so they never have to worry about changing prices every year to accommodate their Canadian customer base. Unless other GOG customers don't mind increasing their gaming budget by +14% because of us.

Feel free to correct my math if something doesn't seem right. All prices in CAD.

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GOG (2020)
Global Revenue = $112M
Net Profit Margin = 6%
Global Net Profit = $6.72M

Canadian
Market Share = 4%
Revenue = $112M * 4% = $4.48M
Net Profit = $4.48M * 6% = $0.269M
Canadian HST (max) = 15%
Max HST Owed = $4.48M * 15% = $0.672
Shortfall = Net Profit + Max HST Owed = $0.269M + $0.672M = $0.941M

Incremental Global Revenue = $0.941M / 6% = $15.7M
2021 Global Revenue Needed for Shortfall = $112M + $15.7M = $128M
Global Revenue Increase % to Accommodate = Incremental Global Revenue / Global Revenue = $15.7M / $112M = 14.0%

Source: CPA Canada under "cross-border digital products and services"

EDIT: 3% DST also applies on Jan 1, 2022 for tech giants.

I am sure that Amazon, Google, Facebook et al. are all shaking in their boots…
No, they probably don’t care as they still will not pay any tax in any country regardless of making vast amounts of money of them. We have a European version also starting soon, but zuckerburg had a chuckle.