As part of the 2018-2019 Quebec budget, Quebec has enacted Quebec Sales Tax (QST) obligations for certain non-resident e-commerce sellers. Non-resident suppliers in Quebec who are located in Canada will generally be required to register to collect and remit QST applicable to the sale of all taxable property – both tangible and intangible – and services made in Quebec to specified Quebec consumers. Non-resident suppliers not located in Canada will generally be required to register to collect and remit QST applicable to the sale of taxable intangible property and services made in Quebec to specified Quebec consumers which are Quebec residents who are not QST registered.
In order to determine if a customer is a Quebec resident, suppliers must retain one of the following pieces of information to determine whether they are “specified Quebec consumers”:
The requirement to register to collect and remit QST will also apply to digital property and services distribution platforms with respect to taxable supplies of incorporeal movable property or services received by specified Quebec consumers, where these digital platforms control the key elements of transactions with specified Quebec consumers, such as billing, transaction terms and conditions, and delivery terms.
The rules regarding digital platforms do not apply to suppliers in the following situations:
Suppliers subject to the new requirements must register for and collect QST under a new specified registration system that is unique to these suppliers, separate from the general QST system. Note that a foreign supplier registered for the specified QST system will not be considered to be registered for the general QST system. Registrants under this special QST system are not entitled to claim an Input Tax Credit for tax paid on its purchases. Purchases by Quebec registered businesses also will not qualify for the Input Tax credit so diligence regarding the nature of the supplier will be critical.
In order for the requirements to apply to a non-QC resident supplier, a $30,000 threshold applies. The $30,000 threshold is based on the value of the considerations for all taxable supplies made by the supplier in Quebec to consumers during the 12-month period preceding the month that includes the particular date and the value of the considerations for supplies deemed to be made outside Quebec. The threshold excludes sales made through a digital platform since the platform provider is responsible for the collection of the tax.
Effective January 1, 2019, all non-resident foreign suppliers subject to the new requirements must register for the specified QST system and collect QST.
Effective September 1, 2019, suppliers that are non-residents of Quebec but located in Canada must register for the specified QST system and collect QST.
Foreign suppliers and suppliers of digital property and service digital platforms that do not comply with the new requirements will be subject to penalties. Revenu Quebec will provides for a 12-month period following the enactment of the new rules for foreign suppliers to comply. After December 31, 2019, Revenu Quebec will issue penalties and assessments to foreign suppliers that are not registered for the new specified QST system. They have also indicated they will use every means at its disposal to identify foreign sellers required to be registered. (2018-2019 Quebec budget, March 27, 2018)