On March 28 2018 Quebec announced that it intends to expand its requirements for non-resident vendors to collect and remit Quebec sales tax (QST) on sales to Quebec consumers, effective as early as January 1 2019. In this context, 'non-resident' will generally include both:
- non-residents of Canada; and
- Canadian businesses outside Quebec that have no significant presence in the province.
It will be interesting to see whether the proposal triggers the same types of legal challenge common in the United States, where states have attempted to force out-of-state sellers to register and collect state sales taxes. In a Canadian context, the issue will be whether the Quebec government has the authority under the Constitution Act 1867 to impose requirements on non-resident businesses that do not carry on business in the province. Another issue will be whether an assessment for failure to collect the tax can be enforced against a non-Quebec seller.
Under the proposal, businesses that are not resident in Canada and supply intangible personal property (or, more precisely, incorporeal moveable property) or provide services in Quebec to specified Quebec consumers will have to register using a simplified registration process and begin collecting QST no later than January 1 2019.
Businesses that are resident in Canada will have until September 1 2019 to comply. Unlike the rule for non-residents of Canada, Canadian businesses outside Quebec must also register for QST purposes if they supply goods for delivery in Quebec to specified Quebec consumers.
In both cases, the threshold for registration is set at C$30,000, based on the seller's sales to Quebec consumers.
The proposal provides for a specified registration system which will be available online using a simplified application form without security, but also without a right to claim input tax refunds for any QST paid. Certain suppliers will have the right to register under the regular registration programme.
Certain digital platform sellers will have to collect QST on sales made by others through the platform. In such cases, the C$30,000 threshold will be measured based on sales made via the digital platform.
Amendments to the QST legislation were not included in the announcement. More detailed information is expected to become available soon.
For further information please contact Rosemary Anderson or Terry Barnett at Thorsteinssons LLP by telephone (+1 604 689 1261) or email ([email protected] or [email protected]). The Thorsteinssons LLP website can be accessed at www.thor.ca.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.