Restoring Tax Fairness: E-Commerce and Tax Issues in Quebec

The Conference Board of Canada, 42 pages, August 11, 2017
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Suppliers not physically present in Quebec do not have to collect commodity taxes. The Quebec government thus misses out on revenue, and this will get worse as online trade grows. How to stop the leakage?

This publication includes an English Executive Summary, followed by a French version of the full report.

Document Highlights

Quebec retailers and suppliers are only marginally present in e-commerce, which is mainly controlled by large foreign companies. Gathering taxes on online sales raises a problem, since suppliers not physically present in Quebec are not required to collect those taxes. Consumers are responsible for paying taxes on purchases from online suppliers not physically present in the province, but they rarely do so. Government revenues from commodity taxes are starting to suffer due to this situation.

This report examines four possible taxation models. The authors then summarize the situation in Quebec and describe how some foreign tax authorities address the problem—which is far from unique to Quebec. Given the impact of these measures on public finances and the enormous losses the status quo generates, Quebec should work with Canada to require suppliers to collect and remit commodity taxes on online sales to consumers who are clearly residents of Quebec.

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