Quebec is extending its sales tax to a broad range of sales of goods, services and intangibles (e.g. software, digitalized products) made from outside the province to customers in Quebec.
Essentially, if your business does not have a physical or significant presence in Quebec and you sell goods, services and intangibles to specified Quebec consumers (see How to Identify specified Quebec consumers), you will need to register and remit the QST. There are two registration dates depending on the type of business.
Let’s break this down a little further.
There are 3 different types of businesses that are affected by the new rules, Foreign Specified Suppliers (FSS), Canadian Specified Suppliers (CSS) and the operator of a Specified Digital Platform (SDP). Each type has very specific characteristics that determine if they must register for the new QST.
Foreign businesses (i.e., businesses outside of Canada or Foreign Specified Suppliers), and SDP’s who are subject to the new rules were required to register by January 1, 2019. Canadian businesses with no physical or significant presence in Quebec (CSS) are required to register by September 1, 2019.
However, certain businesses may not be required to register under the new QST rules if they earn $30,000 or less in revenue in the last 12-month period from specified Quebec consumers, under a small supplier rule.
To determine whether QST must be collected under the new QST rules, businesses outside Quebec will have to determine whether any of their customers in Quebec meet the definition of “Specified Quebec Consumers” (SQC). The definition of an SQC is a person who is not registered for QST and who resides in Quebec.
The business will need to put procedures in place to determine if their customers in Quebec are subject to the QST. To do so, businesses will need to determine the customer’s “usual place of residence” and whether the customer is registered for QST purposes. As part of this determination, suppliers outside of Quebec will be required to obtain two pieces of information related to each consumer’s usual place of residence, such as the person’s billing or personal address, a device’s IP address or payment-related bank information.
If you believe you may be subject to the new QST system, your accounting systems will need to be modified to charge and collect the QST. Also, you will need to add procedures to the information that you gather to include the identification information about your Quebec customers.
We can help you navigate through these changes and help you determine if you need to register for the new QST system.