On November 10, 2017, the Government of Québec tabled an Action Plan featuring consumption tax strategies for the digital and sharing economies.
Sharing economy: New tax compliance agreements
Regarding the sharing economy, the Action Plan stresses the appropriateness of the agreements reached by McCarthy Tétrault for Uber and Airbnb, and indicates that “the Québec government plans to meet with other businesses active in the sharing economy in order, as the case may be, to reach agreements like those entered into with Uber and Airbnb.”
McCarthy Tétrault understands the tax issues faced by sharing economy platforms and participants, and we know how to design practical solutions for our clients in compliance with tax laws. No other firm has the same experience.
Digital economy: Compulsory registration of suppliers outside Québec
The Government of Québec estimates that in 2017, Québec recipients of online products and services failed to self-assess and remit $270 million in Québec Sales Tax.
To remedy this situation, the Action Plan proposes, in coordination with the federal government, that foreign suppliers be required to register with Revenu Québec and remit the GST and QST collected from Québec recipients.
This approach, which is not without precedent in Québec taxation, will require certain guidelines. For example, only suppliers with significant sales in Québec should be obliged to register.
McCarthy Tétrault is a leader in this area and can help you better predict the impact of the Action Plan proposals on your operations in Québec.
Role of financial institutions
The Action Plan rejects as “impractical” the collection of the QST via credit card transactions, mainly for reasons related to tax compliance, the risk of double taxation and the possibility of tax avoidance by consumers.
The news has been well received by the banking industry, and shows that the Government of Québec is attentive to the legal and practical issues raised by the proposed measures.
You can click here in order to obtain an example of a tax compliance agreement.