In 2018, the Québec government announced the implementation of a new and parallel Québec sales tax (“QST”) registration system under which (i) non-Canadian suppliers with no physical or significant presence in Québec are required to collect and remit the QST on taxable incorporeal movable property and services they supply in Québec to Québec consumers; and (ii) Canadian suppliers with no physical or significant presence in Québec are required to collect and remit the QST on taxable corporeal movable property they supply in Québec to Québec consumers (the “New Foreign Supplier Regime”). The New Foreign Supplier Regime applies where the aggregate value of the considerations for taxable supplies made by the foreign supplier in Québec to consumers exceeds a C$30,000 minimum threshold.
The amendments to the Act respecting the Québec sales tax (“AQST”) under the New Foreign Supplier Regime came into force on two separate dates, as determined based on where the foreign supplier carried on business, had a permanent establishment and was registered. Generally,:
- Non-Canadian suppliers with no physical or significant presence in Québec were required to register and collect QST as of January 1, 2019; and
- Canadian suppliers with no physical or significant presence in Québec were only required to conform to the new requirements as of September 1, 2019.
Through an online registration platform, the registration process has been simplified to encourage compliance. It is important to note that the New Foreign Supplier Regime is based on a separate and parallel QST registration system where, inter alia, non-resident suppliers do not benefit from input tax refunds in respect of QST payable for their own inputs, if any.
For the purposes of completeness and harmonization with other AQST provisions, Québec Bill 13 (“Bill 13”) received Royal Assent in June 2019 to include measures not previously provided in the original amendments to the AQST implementing the New Foreign Supplier Regime (i.e., under new Chapter VIII.I). As a complement to the current legislation, Bill 13 retroactively came into effect on January 1, 2019. The three most relevant amendments aim to both alleviate certain administrative burden and ensure compliance: (i) the election of an agent to account for taxes, (ii) the conversion of foreign currency for remittance purposes, and (iii) the Minister’s discretion to register non-resident suppliers under the New Foreign Supplier Regime.
Section 41.0.1 of the AQST offers QST-registered suppliers the possibility of appointing an agent to account for the QST on their behalf. Bill 13 amends section 41.0.1 effective as of January 1, 2019 and extends such election to foreign suppliers registered under the New Foreign Supplier Regime. Where a joint election between the agent and the foreign supplier is made, QST collected under the New Foreign Supplier Regime can be remitted by the agent.
Moreover, Bill 13 repeals and amends section 477.15 of the AQST to include remittance of collected QST in certain prescribed foreign currencies. In addition to the Canadian dollar, foreign suppliers may elect to determine their net tax for a reporting period and remit QST in Euros or US dollars (the “Prescribed Foreign Currency”). In the event the supply is expressed in another foreign currency, the method of conversion into the Prescribed Foreign Currency of choice must be acceptable to the Minister and used consistently for at least 24 months.
Finally, under sections 415.0.4 to 415.0.6 of the AQST, the Minister is entitled to register Quebec suppliers that it has reason to believe are not in compliance with the “regular” registration requirements. Bill 13 amends section 477.5 of the AQST (by referring to sections 415.0.4 to 415.0.6) to extend the Minister’s powers to unilaterally force the registration of foreign suppliers under the New Foreign Supplier Regime.
This article was originally published by The Lawyer’s Daily (www.thelawyersdaily.ca), part of LexisNexis Canada Inc.