In South Dakota v. Wayfair Inc., the United States Supreme Court is considering whether retailers shipping goods to states where they have no physical presence can be required to collect sales tax from their customers. New rules proposed by the Québec Government raise similar legal and commercial issues for businesses making sales to consumers in the province of Québec.
The 2018-2019 Québec Budget proposes to significantly expand the geographic scope of the Québec Sales Tax (QST) by imposing QST registration and collection obligations on non-Québec businesses making sales in the province. Currently, a supplier is generally not required to register for QST if it is resident outside Québec and does not carry on business in Québec. The proposals would impose a registration obligation on a non-Canadian supplier who:
(a) has sales to Québec consumers which exceed C$30,000 annually; and
(b) supplies intangible property or services to Québec consumers.
The new registration requirement would also apply to digital platforms having control over the key elements of transactions between non-resident suppliers and Québec consumers.
A registered business that is resident outside Canada will be required to collect and remit QST to the Québec tax authorities in respect of certain supplies, generally including a supply of:
- intangible property, if the property may be used in whole or in part in Québec; and
- services, if the services are or are to be consumed in whole or in part in Québec.
No statutory language was included in the announcement of the proposals – additional information will become available when legislation is released.
Both the constitutionality of the provincial tax and the ability of the Québec Government to enforce an assessment of the tax against a non-Canadian seller are arguably uncertain.
For suppliers who are residents outside Canada, and for digital platforms enabling such suppliers, the new rules are proposed to come into effect on January 1, 2019.