Never missing an opportunity to impose taxes, Quebec says it will implement a so-called ‘Netflix tax’ starting January 1st, 2019.
The decision means suppliers of goods and services based outside of Quebec will be required to pay a 9.975% provincial sales tax. The tax applies to companies that generate over $30,000 of revenue in Quebec per year.
Quebec has become the first province to implement a 'Netflix tax'.
The new announcement has made the super long “Except in Quebec” list. pic.twitter.com/Z26UX0c11u
— Clinton Herman (@ClintonOnAir) March 29, 2018
“For services, Netflix and others, we are proposing legislative measures that will force these companies to register for our provincial sales tax regime,” said Finance Minister Carlos Leitao Tuesday at a press conference in Quebec City. “They will need to collect the sales tax and to send it to us.”
Currently, foreign streaming services without a physical presence in Canada don’t have to collect or remit federal or provincial sales taxes. This, of course, puts local rivals at a fiscal disadvantage.
It’s likely that the price of a Netflix subscriptions in Quebec will increase to account for the extra tax. Quebec, meanwhile, expects to recover $155 million in lost revenue over five years. According to estimates by the provincial finance ministry, Quebec currently loses around $270 million a year by failing to collect taxes from online sales made by companies operating outside of the province.
The new tax doesn’t just affect Netflix, either. Amazon, Spotify, iTunes and other online services based outside of Quebec will be forced to pay provincial sales tax in Quebec. How exactly they will come up with the money (see: from customers) remains to be seen.
The federal government has been mulling a sales tax on services like Netflix for years, though Quebec is the first province to take action.
