This article is taken from our quarterly overview of Canadian news, a newsletter published by the Canadian member firms of
Moore Stephens North America
. It is part of our mission to be the partner of choice for your success, by keeping you informed of the latest news and developments..
Quebec sales tax and e-commerce measures
The rise of e-commerce poses difficulties for suppliers with no significant or physical presence in Quebec in collecting QST. This situation has repercussions on the competitiveness of Quebec suppliers, in addition to reducing the revenue required by the provincial government. In response, a compulsory registration system was introduced.
About the mandatory registration system
In its 2018-2019 budget, the Quebec government introduced the mandatory registration system (also known as the “designated registration system”) for non-resident suppliers. Under the Act, non-resident suppliers will be required to collect and remit QST on taxable intangible personal property and services supplied in Quebec to persons who live in Quebec but are not registered for QST purposes. In addition, Canadian suppliers will be required to collect and remit QST on tangible personal property supplied in Quebec to Quebec consumers.
To establish a customer’s residence and location, non-resident suppliers may refer to the customer’s billing address, IP address or banking information. Customers who falsify this information could face severe penalties.
Mandatory registration and e-commerce
Distribution platforms for digital products and services (“digital platforms”) are now required to register with the mandatory registration system if they control the main stages of transactions with designated Quebec consumers (i.e. billing, transaction terms and conditions and delivery).
Registration will be mandatory for non-resident suppliers whose value of consideration for taxable goods and services performed in Quebec exceeds the $30,000 annual threshold. Non-resident suppliers registered with the designated registration system will not be considered registrants for the purposes of the other provisions of the Act respecting the Québec sales tax and will not be able to claim input tax refunds. They will, however, be able to register for the general QST registration system if they meet the registration criteria.
The Quebec government’s objective is to make the mandatory registration system simple and easy to use. The declaration must be filed electronically on a quarterly basis, and rebates will be paid in USD or EURO.
The mandatory registration system will come into effect on January1, 2019, for non-resident suppliers outside Canada, and on September1, 2019, for non-resident suppliers located in Canada.
To learn more about the mandatory registration system, its effects on your business and how it may or may not affect the way you do business, write to us. We’ll prepare you for long-term success in Quebec.
