Quebec is getting serious about taxing Amazon.com and Netflix Inc.
Canada’s second-most populous province on Tuesday said it would make the collection of the provincial sales tax mandatory for suppliers of goods and services based outside Quebec to put them on par with local rivals.
Quebec expects the measures will enable it to recover C$155 million (US$120 million) in lost revenue over five years, according to budget documents released in Quebec City.
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A failure to collect taxes on online sales of goods and services to companies outside the province costs Quebec about C$270 million annually, according to estimates by the provincial Ministry of Finance.
Most of the money, or C$158 million, pertains to goods such as shoes and clothes purchased abroad, Quebec Minister of Finance Carlos Leitao said on Tuesday.
An agreement between Los Gatos, California-based Netflix and the federal government over filming in Canada provoked widespread outrage in Quebec last year, in part because it did not subject the company to a sales tax.
That sparked the ire of Canadian media companies that must apply the tax, including on streaming units they set up to compete with Netflix.
“For services, Netflix and others, we are proposing legislative measures that will force these companies to register for our provincial sales tax regime,” Leitao said on Tuesday at a news conference in Quebec City. “They will need to collect the sales tax and to send it to us.”
For companies selling goods online, Quebec will follow the approach recommended by the Organisation for Economic Co-operation and Development, which is to collect taxes at the border, Leitao said.
Starting on Jan. 1 next year, foreign companies that sell more than C$30,000 a year in taxable supplies of goods or services to Quebec consumers would be required to register for the provincial sales tax, budget documents show.
Until now, suppliers without a physical or significant presence in the province were not required to register for the tax, or to collect or remit it.
Canadian companies that do not have a physical or significant presence in Quebec are to get eight more months to adjust: They are not going to be required to register for the provincial sales tax until Sept. 1 next year.
“Given the Canadian economy’s high level of integration, a potentially significant number of businesses of all sizes may be impacted,” the ministry’s document said.
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