TAX, SOCIETY & CULTURE

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Corporate Tax for the 21st Century

Follow the discussion about this conference on Twitter there is one solution that already works in practice to the problem cited by Steve Shay and others of having no physical presence PE. That is having different rates of taxation imposed on a destination basis by a national or supranational federalized tax system for such as occurs in the Canadian GST/HST. For example a business based in Alberta with physical presence in no other province, where no sales tax exists except for the base Federal 5% GST but yet sells to(in legal terms makes supplies to) customers in Ontario or the Atlantic provinces is legally required to charge the additional blended HST rates of up 15% and remit them to Ottawa under the Federal ETA. Notably this doesn't apply to Quebec despite have a closely sales tax as Ottawa due to the fact Quebec's system exists separate legal authority and administration. Thus an Alberta would have to have physical presence in Quebec to be required to charge QST/TVQ.

I will note there are significant sovereignty with the Canadian federalized HST system(first started in the 1990s) and I note again Quebec doesn't participate in full. However, until the early part of this decade many people believed that Ontario would never cede the legal authority for sales tax collection to Ottawa however, in a change of heart I suspect they looked at the way the world was moving technology wise and decided Ottawa could maintain the sales tax base in a globalized world much better than Ontario could on its own.

Published Jan 22, 2017 by Tim

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