Québec Sales tax

Not quite networking but probably relevant.

The Canadian province of Québec just introduced a new budget with
basically the intent to force foreign digital companies who sell
services to Québekers to collect the local value added sales tax and
remit those to the QC government.

The goal is to capture tax from Netflix who has so far escaped taxation
in Canada by having no legal/physical presence in Canada, no cache
servers of its own etc. Netflix does not currently collect province
information from customers (or any address info for that matter).

They based many of their arguments on an OECD study (which ironically
the Canadian federal government says is not completed yet (as excuse for
not proceeding with similar tax).

So foreign digital services will be required to require subscibers enter
AND VALIDATE their address so that they have an accurate province field
(validation remains to be finalized), and IF they sell more than $30,000
to Québec residents, will be required to self register with QC
government to collect local sales tax (and remit to QC government).

The Québec budget expects that validation of address will be based on IP
address geolocation or custoemrs send paper bills to prove place of

(Although requiring full address/phone number and sendint this to credit
card network for authorization might constitute a better means to
validate address).

I suspect the big winners will be VPN services in the USA :slight_smile:

Because many ISPs span multiple provinces, IP geolocation generally
points to their HQ address, not necessarily the province of the
subscriber. (This is especially true for DSL in bell Canada wholesale
where currently a single point of connection between Bell and ISP allows
full reach of all of its DSL territory in QC/ON. For Cable, ISPs require
different IP pools for Rogers in Ontario and Vidéotron in Ontario (with
a couple of exceptions where Vidéotron has service in a couple fo
Ontario towns). In Western Canada, things are harder as Shaw serves BC,
AB, SASK and MB.

If Netflix has no physical presence in Quebec, what the lever are they going
to use to force this? A lawsuit in <state of netflix incorporation> in the
US? What court is going to entertain a foreign jurisdiction's tax claim in
their court? And how would that be then enforced?

Canada has tried this before:


Court file: https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/16701/index.do

Im a big fan of Canada standing up for its sovereignty (I live here), but nice


On the IP geoloc subject, we (EBOX) actually have multiple pools for QC-based and ON-based customers. When a customer is provisioned, his service address is validated in our system and it auto-populates the Radius profile with a different profile for each provinces e.g. fttn-on-50 or fttn-qc-50. I don't see why we couldn't do this on Telus in the west (we're currently only servicing QC and ON).

On the TPIA side, it's a little bit less easy. I could automatically SWIP netblocks from reports we get from the operators to the POI they're configured in.
I don't see this as a big issue.

Or Netflix could just call the QC govt's bluff and just stop serving QC
customers and see QC voters rebel against the government if they lose

The "no presence in Canada" has had other impacts *Netflix refusing to
comply to a CRTC request for infornation claiming CRTC doesn't regulate
foreign companies with no presence in Canada). (Ironically, Netflix has
hired lobysists who are quite active in Canada).

The jurisdiction aspect is an important one. Basically, the current
structure favour people buying services outside their own country to
avoid tax. And it isn't just in Canada. (For instance, the small
Canadian streaming services have to charge tax to their customers, but
Netflix doesn't. (google/apple do because they have physical presence here).

BTW, and this is a serious Orwelian thing, foreign providers who
register will be required to give the QC government their customer lists
so that the QC govt can find any tax cheaters who pretend to live in
different province and charhe penalies of $100 or more to those

So the QC govt will claim some fairly serious extra-territorial powers.

You may all have different IP pools, but are they registered such that
geolocation services show them with different provinces, or do they all
point to your

OrgName: EBOX
OrgId: QUEBE-50
Address: 1225 St-Charles Ouest, Suite 1100
City: Longueuil
StateProv: QC
PostalCode: J4K 0B9
Country: CA

address ?

(there were complains in the past of some of your ON customers unable to
access Sport Check and being directed to Sport Experts store web sites
due to geolocation.

Same deal as Paypal and EBay\.

 Netflix dropping their services in CDN/QC only serve &lt;Yuo know who&gt; attempt at making yet another market grab\.

 At the end Netflix may just charge the Tax and funnel it to the govt\.  They&#39;ll still be making a bundle\.

     \( And with all the hardware already deployed locally at the many exchanges \.\.\. \)

 Now if we can only break that damn 1930&#39;s licensing scheme so that we can gain access to more content\.\.\.  Kinda annoyed that &lt;You know who&gt; is hogging all the content with their vertical licensing agreements\.

bell canada?


 Same deal as Paypal and EBay\.

Paypal and EBay have not worked fevereshly to avoid a presence in
Canada. They have presence and already handle the taxes.

 Netflix dropping their services in CDN/QC only serve &lt;Yuo know who&gt; 

attempt at making yet another market grab.

Netflix has worked VERY hard to avoid having a presence in Canada to
avoid not only taxation, but also regulation from CRTC in broadcasting,
having to contribute to various funds etc.

The danger here is that it may feel that losing its QC customers is
worth the price of maintaining the illusion it has no presence in Canada.

There is also a class action lawsuit for Netflix because it did not
follow the Québec Consumer procection law when it raised its rates a
year or two ago. Class action lawsuits can be very expensive.

And to bring his back to the network/ISP level: this is why it is very
important that ISPs remain "common carriers" who do not control or have
responsibility over content so that they don't get dragged into all
those issues.

     \( And with all the hardware already deployed locally at the 

many exchanges ... )

Netflix owns NO, NONE, NADA, ZERO hardware in Canada. It has no offices
in Canada. Gifting the network appliances to ISPs means Netflix does
not own the hardware and thus maintains its "no presence here".

The second Netflix has physical presence here, the existing tax laws
kicks in and Netflix must collect federal and provincial taxes.