RealTime IT News

Revenue Canada Report Tackles E-Commerce

Revenue Canada's Advisory Committee on Electronic Commerce released "Electronic Commerce and Canada's Tax Administration," presenting 72 recommendations on tax policy for cross-border electronic transactions.

The report is available on the Revenue Canada Web site. The most recent KPMG Canadian Tax Letter gives a detailed summary and analysis.

Committee members included representatives of government, business, ISPs, and computer experts. KPMG was the only accounting firm invited to send representatives.

"This is an area that is changing very rapidly, here and in other countries," says KPMG Tax Partner Wayne Chodzicki. "Governments are scrambling to keep up with developments in electronic commerce. They know that increasing amounts of commerce will be transacted online, and they want to be sure that they get their share of tax revenue."

Key recommendations included:

  • Governments should impose no new taxes (such as the "bit tax") on electronic transactions and avoid placing additional compliance burdens on taxpayers, suppliers or supporters.
  • Governments should avoid unduly regulating and restricting e-commerce and let the private sector take the lead in management and development.
  • Where government involvement is needed, its aim should be to support and enforce a predictable, consistent, and simple legal environment.
  • Governments should change the traditional collection responsibility for sales tax from vendors to third parties such as financial intermediaries or transaction intermediaries.