Subscribers will start paying QST in 2019
QUEBEC The Quebec government is making good on its promise to level the playing field for subscription video services and will require Netflix and similar services to start collecting and paying Quebec sales tax as of next year.
The measure, announced in Tuesday’s budget plan, requires companies in the rest of Canada (as of Sept. 1, 2019) and foreign countries (as of Jan. 1, 2019) that sell digital services to Quebecers to register with the government and pay QST once they pass $30,000 a year in revenue from Quebecers.
The federal government has refused to impose a similar measure for the goods and services tax despite a recommendation from the Organization for Economic Cooperation and Development and lobbying from Canadian service providers like Bell’s Crave TV and Videotron’s Club Illico, which collect sales taxes.
Service providers, which include any supplier providing intangible goods and services and not just video services, will be required to validate a customer’s usual residence” using two pieces of information such as a billing address, personal address, IP address, bank information or phone number, though the government says Revenu Québec can establish an alternative method.
Customers who are caught falsifying their place of residence to avoid paying the tax will be liable to a penalty of $100 or 50 per cent of the QST payable, whichever is higher, on top of the unpaid taxes and interest.
For suppliers, no penalties are specified in the budget announcement. Instead, the government says companies that “show that they have taken reasonable measures to meet their new obligations” will be given leeway over the first year of the measure. The government will also make it easier to register for QST, making it an online process with “a minimal exchange of physical documents,” with information available in French and English, and will even accept payments in foreign currencies.
Quebecor, which owns Videotron, issued a statement Tuesday praising the tax measure.
“We are happy to see that, contrary to the federal government that persists in its abdication in the face of online giants, the Quebec government has followed its unprecedented mobilization in cultural affairs by obliging online platforms to impose sales taxes,” Quebecor CEO and former Parti Québécois leader Pierre Karl Péladeau said.