Budget Leitao 2018: Quebec taxera Netflix

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Patrick Bellerose

Tuesday, march 27, 2018 16:18

UPDATE
Tuesday, 27 march 2018 20:28

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Quebecers will now be required to pay the QST on the intangible goods and services purchased online across borders, such as the subscription to the giant in the field of digital entertainment, Netflix.

The government Couillard announced Tuesday in his budget that he will be alone in front of the inaction of Ottawa, in the folder of the electronic commerce, stating that it is an “issue of fairness” to companies in quebec.

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Quebec, however, will rely on the good will of the foreign companies, who will have to collect voluntarily the QST with their consumers.

The government has little recourse against the companies recalcitrant, but the minister of Finance considers that the large, publicly listed companies will not want to be seen as bad corporate citizens. “And the feedback we have from these companies is : if you put in place a legislative framework, we will comply with this legislative framework,” said Carlos Leitao.

Photo Simon Clark

Low income

For foreign suppliers of intangible goods and services, the obligation to collect the sales tax will apply starting in January 2019. Currently, quebec consumers are supposed to pay a voluntary self-assessment of the QST, but the measure has little success.

The canadian vendors without a physical presence in Quebec, they will have until September 1, 2019 to comply with the new measure. Quebec is to grant them this extra time due to the large number of businesses that must register with Revenue Quebec.

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Pilot project

As for the physical goods which are imported in Quebec, such as shoes and books, the government is counting on the canada border services Agency of Canada to collect the QST on the packages that cross the border.

As soon as this spring, a pilot will be put in place at the sorting centre at Canada Post in Montreal. “With the addition of technical resources and human resources, Canada Post will roll out a new strategy to be able to control a greater number of parcels,” says Carlos Leitao. If the pilot project is successful, it will be extended to other areas subsequently.

Quebec estimates that the e-commerce outside of Quebec made him lose$ 270 million in tax revenues annually. With these measures, the government Couillard hopes to recover$ 155 million over five years.

The e-commerce and international tax evasion do not count, however, for only a small share of the money beyond the taxman each year, while the black economy of Quebec is depriving the State of$ 3.8 billion annually.

In summary

270 M$ : sum lost annually via the online trade elsewhere in Canada and internationally

68,4 M$ : lost taxes on digital goods and services

To 158.4 M$ : lost taxes tangible property

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