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.