The federal government failed to collect $169 million in sales tax on foreign digital products and services sold in Canada in 2017, Canada’s auditor general reported Tuesday.

One of Interim Auditor General Sylvain Ricard’s spring reports said the Canada Revenue Agency (CRA) lacks the legislative authority to require foreign vendors to register for, collect and pay the GST/HST.

The agency also lacks authority to implement compliance practices that have worked in other jurisdictions, the report said, including simplified registration or using third-party data to detect tax non-compliance.

The CRA didn’t use its limited third-party data for compliance related to the GST/HST, it said.

“Overall, we found that the Canadian sales tax system did not keep pace with the rapidly evolving digital marketplace,” the report said.

The Excise Tax Act requires non-resident vendors to register for, collect and pay GST/HST when carrying on business in Canada and earning more than $30,000 in taxable revenues in the four most recent quarters.

The CRA identified digital commerce and the sharing economy—including video streaming services and accommodation rental platforms—as risks in its corporate risk profiles.

However, the auditor general found the agency had “very few” compliance activities for evaluating whether vendors of digital products should register for the GST/HST, and “no planned compliance activities” for the accommodation-sharing sector.

The CRA also said it did not track the number of audits it completed of e-commerce vendors and accommodating-sharing platforms.

In response to the report, the CRA noted that the estimated $169 million loss was “a small fraction” of the $4.9 billion GST/HST gap estimated in 2014.

“Since the agency expects the scale of e-commerce to continue to grow, the agency will develop a dedicated compliance strategy to better detect and address non-compliance for the GST/HST in e-commerce and will continue to expand its compliance actions, including the better leveraging of third-party data,” the CRA wrote in response to the report.

Read the full report here.